Cencosud S.A. Form 6-K Current Report Filed 2017-08-28

SECURITIES AND EXCHANGE COMMISSION

FORM 6-K Current report of foreign issuer pursuant to Rules 13a-16 and 15d-16 Amendments

Filing Date: 2017-08-28 | Period of Report: 2017-08-28 SEC Accession No. 0001654954-17-007919

(HTML Version on secdatabase.com)

FILER Cencosud S.A. Mailing Address Business Address AV. KENNEDY 9001, PISO 6 AV. KENNEDY 9001, PISO 6 CIK:1544856| IRS No.: 000000000 LAS CONDES LAS CONDES Type: 6-K | Act: 34 | File No.: 001-35575 | Film No.: 171053231 SANTIAGO F3 00000 SANTIAGO F3 00000 SIC: 5331 Variety stores 56 (2) 959-0000

FORM 6-K

Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 under the Securities Exchange Act of 1934

For the month of August, 2017

Commission File Number 001-35575

Cencosud S.A. (Translation of registrant’s name into English)

Av. Kennedy 9001, Piso 6 Las Condes, Santiago Chile (Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40 F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document This report on Form 6-K is being furnished for the purpose of providing a copy of the registrant’s unaudited condensed consolidated interim financial statements as of and for the six month period ended June 30, 2017 (the “Consolidated Financial Statements”). The Consolidated Financial Statements are presented in Chilean pesos and prepared in accordance with International Financial Reporting Standards.

The attachment contains forward-looking statements. The registrant desires to qualify for the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995, and consequently is hereby filing cautionary statements identifying important factors that could cause the registrant’s actual results to differ materially from those set forth in such forward-looking statements.

The registrant’s forward-looking statements are based on the registrant’s current expectations, assumptions, estimates and projections about the registrant and its industry. These forward-looking statements can be identified by words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “is/are likely to,” “may,” “plan,” “should,” “would,” or other similar expressions.

The forward-looking statements included in the attached involve various risks and uncertainties, including, among others: (i) changes in general economic, business or political or other conditions in Chile, Argentina, Brazil, Peru, Colombia or elsewhere in Latin America or global markets; (ii) changes in capital markets in general that may affect policies or attitudes towards investing in Chile, Argentina, Brazil, Peru, Colombia or securities issued by companies in such countries; (iii) the monetary and interest rate policies of the Central Banks of Chile, Argentina, Brazil, Peru and Colombia; (iv) high levels of inflation or deflation; (v) unanticipated increases in financing and other costs or our inability to obtain additional debt or equity financing on attractive terms; (vi) movements in interest and/or foreign exchange rates, and movements in equity prices or other rates or prices; (vii) changes in, or failure to comply with, applicable regulations or changes in taxes; (viii) loss of market share or changes in competition and pricing environments in the industries in which the Company operates; (ix) difficulties in successfully integrating recent and future acquisitions into the Company’s operations; (x) the Company’s inability to hedge certain risks economically; (xi) changes in consumer spending and saving habits; (xii) implementation of new technologies; (xiii) limitations on the Company’s ability to open new stores and operate them profitably; (xiv) difficulties in completing proposed store openings, expansions or remodeling; (xv) difficulties in acquiring and developing land in Chile, Argentina, Brazil, Peru or Colombia, and restrictions on opening new large stores in any such countries; and (xvi) the factors discussed under the heading “Risk Factors” as well as risks included in the Company’s other filings and submissions with the United States Securities and Exchange Commission.

Although the registrant believes that its expectations expressed in these forward-looking statements are reasonable, its expectations may turn out to be incorrect. The registrant’s actual results could be materially different from its expectations. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in the attached might not occur, and the registrant’s future results and its performance may differ materially from those expressed in these forward-looking statements due to, including, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.

The forward-looking statements made in the attached relate only to events or information as of the date on which the statements are made in the attached. The registrant undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Cencosud S.A.

Date: August 28, 2017 By: /s/ Sebastián Rivera Martínez Name: Sebastián Rivera Martínez Title: Legal Manager

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Cencosud S.A. and subsidiaries, condensed consolidated interim statements of financial position

As of December 31, Assets Note June 30, 2017 2016 ThCh$ ThCh$ (unaudited)

Current assets Cash and cash equivalents 150,726,728 275,219,003 Other financial assets, current 5 80,581,582 219,988,622 Other non-financial assets, current 43,217,868 23,628,279 Trade receivables and other receivables 6 792,070,905 867,139,677 Receivables due from related entities, current 14,378,482 28,988,176 Inventory 8 1,182,666,184 1,149,286,014 Current tax assets 81,130,093 74,135,647

Total current assets other than non-current assets held for sale 2,344,771,842 2,638,385,418

Assets classified as held for sale 21 64,077,355 57,123,872

Total current assets 2,408,849,197 2,695,509,290

Non-current assets Other financial assets, non-current 5 272,092,635 287,360,674 Other non-financial assets, non-current 50,429,428 52,335,275 Trade receivable and other receivables, non-current 6 18,214,442 11,893,706 Equity method investment 203,504,519 200,727,534 Intangible assets other than goodwill 9 411,389,799 408,168,114 Goodwill 10 1,429,164,300 1,432,319,489 Property, plant and equipment 11 2,521,046,323 2,578,793,573 Investment property 12 2,139,876,578 2,081,694,027 Non-current tax assets, 77,211,478 83,376,450 Deferred income tax assets 623,002,505 616,579,356

Total non-current assets 7,745,932,007 7,753,248,198

Total assets 10,154,781,204 10,448,757,488

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

As of December 31, Net equity and liabilities Note June 30, 2017 2016 ThCh$ ThCh$ (unaudited)

Current liabilities Other financial liabilities, current 13 605,630,732 408,009,016 Trade payables and other payables 1,701,950,774 1,926,847,052 Payables to related entities, current 15,683,885 18,722,919 Provisions and other liabilities 14 12,497,669 11,779,434 Current income tax liabilities 25,719,723 74,585,510 Current provision for employee benefits 96,485,316 106,496,839 Other non-financial liabilities, current 37,335,980 26,977,677

Total current liabilities other than non-current assets held for sale 2,495,304,079 2,573,418,447

Liabilities classified as held for sale 21 6,013,134 15,669,233

Total current liabilities 2,501,317,213 2,589,087,680

Non-current liabilities Other financial liabilities, 13 2,763,487,395 2,903,625,666 Trade accounts payables 3,700,644 4,803,725 Provisions and other liabilities 14 66,727,603 68,256,160 Deferred income tax liabilities 729,609,244 719,542,091 Other non–financial liabilities, non–current 77,570,609 79,390,431

Total non-current liabilities 3,641,095,495 3,775,618,073

Total liabilities 6,142,412,708 6,364,705,753

Equity Paid-in capital 15 2,420,602,349 2,420,564,735 Retained earnings 2,482,702,577 2,489,410,413 Issuance premium 461,289,173 461,302,097 Other reserves (1,352,671,875) (1,286,017,106)

Equity attributable to controlling shareholders 4,011,922,224 4,085,260,139 Non-controlling interest 446,272 (1,208,404)

Total equity 4,012,368,496 4,084,051,735

Total equity and liabilities 10,154,781,204 10,448,757,488

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

Statements of profit and loss Note 6/30/2017 6/30/2016 ThCh$ ThCh$ Revenues from ordinary activities 18 5,109,600,697 4,988,004,371 Cost of Sales 16 (3,643,747,192) (3,540,716,396) Gross Profit 1,465,853,505 1,447,287,975 Other income by function 16 78,692,289 90,697,286 Distribution cost 16 (13,534,175) (12,635,011) Administrative expenses 16 (1,188,651,547) (1,131,135,634) Other expenses by function 16 (84,606,065) (80,199,820) Other losses, net 16 2,300,437 51,714,412 Operating profit 260,054,444 365,729,208

Finance income 16 7,762,687 6,876,691 Finance expenses 16 (128,924,382) (129,973,397) Participation in profit of equity method associates 7,939,336 5,271,896 Exchange differences 16 31,271,545 44,613,633 Losses from indexation 16 (7,200,590) (8,251,185) Profit before income tax 170,903,040 284,266,846

Income tax expense 17 (78,780,003) (88,871,238)

Profit from continuing operations 92,123,037 195,395,608

Profit attributable to controlling shareholders 90,412,849 194,033,830 Profit attributable to non–controlling shareholders 1,710,188 1,361,778

Net Profit 92,123,037 195,395,608

Earnings per share Basic earnings per share from continued operations 31.6 68.6 Diluted earnings per share from continued operations 31.6 68.1

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

For the six months ended Statements of comprehensive income (loss) 6/30/2017 6/30/2016 ThCh$ ThCh$ Net Profit 92,123,037 195,395,608

Other comprehensive profit Items that will not be reclassified to profit and loss Revaluation surplus - - Re-measurements of employee benefit obligations - - Total OCI that will not be reclassified to profit and loss - -

Items that may be reclassified to profit and loss Foreign currency translation losses (66,325,490) 14,261,749 Cash flow hedge (2,948,126) 9,802,380

Total items that may be reclassified to profit and loss (69,273,616) 24,064,129

Other comprehensive income, before taxes (69,273,616) 24,064,129

Income tax related to revaluation surplus - - Income tax related to re-measurement of employee benefit obligations - - Total income tax that will not be reclassified to profit and loss - -

Income tax related to cash flow hedge 795,994 (2,637,247) Total income tax that may be reclassified to profit and loss 795,994 (2,637,247)

Total other comprehensive loss (68,477,622) 21,426,882

Total comprehensive income (loss) 23,645,415 216,822,490

Income (loss) attributable to Owners of the Company 21,990,739 215,723,561 Non-controlling interest 1,654,676 1,098,929

Total comprehensive income (loss) 23,645,415 216,822,490

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Cencosud S.A. and subsidiaries, Condensed consolidated interim statement of changes in net equity for the six months ended June 30, 2017 (unaudited)

Equity Share attributable Statement of Revaluation Employeebased to Non- changes innet Paid- Share surplus Translation Hedge benefit payments Other Total Retained parent companycontrolling Total equity ThCh$ incapital premiumreserves reserves reserves reserves reserves reserves reserves earnings shareholdersinterest equity Opening balance as of January 1, 2017 2,420,564,735461,302,09714,252,148(1,250,381,663) (22,078,872) (1,120,048) 26,949,962(53,638,633) (1,286,017,106) 2,489,410,4134,085,260,139(1,208,404) 4,084,051,735

Changes in equity Net profit ------90,412,849 90,412,849 1,710,188 92,123,037 Other comprehensive (loss) profit - - - (66,269,978) (2,152,132) - - - (68,422,1) 10 - (68,422,110) (55,512) (68,477,622)

Total Comprehensive (loss) profit - - - (66,269,978) (2,152,132) - - - (68,422,1) 1090,412,849 21,990,739 1,654,676 23,645,415

Share issuance 37,614 (12,924) ------24,690 - 24,690 Dividends ------(97,120,685) (97,120,685) - (97,120,685) Stock option (see Note 20) ------1,767,330 - 1,767,330 - 1,767,330 - 1,767,330 Decrease due to changes in ownership interest without a loss of control ------11 11 - 11 - 11

Total transactions with owners 37,614 (12,924) - - - - 1,767,330 11 1,767,341 (97,120,685) (95,328,654) - (95,328,654)

Total Changes in equity 37,614 (12,924) - (66,269,978) (2,152,132) - 1,767,330 11 (66,654,769) (6,707,836) (73,337,915) 1,654,676 (71,683,239)

Ending balance, as of June 30, 2017 2,420,602,349461,289,17314,252,148(1,316,651,641) (24,231,004) (1,120,048) 28,717,292(53,638,622) (1,352,671,875) 2,482,702,5774,011,922,224446,272 4,012,368,496

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

Equity Share attributable Statement of Revaluation Employeebased to Non- changes innet Paid- Share surplus Translation Hedge benefit payments Other Total Retained parent companycontrolling Total equity ThCh$ incapital premiumreserves reserves reserves reserves reserves reserves reserves earnings shareholdersinterest equity Opening balance as of January 1, 2016 2,321,380,936526,633,344 - (1,187,109,821) 14,859,584(229,427) 19,276,599(52,476,934) (1,205,679,999) 2,329,411,4783,971,745,759(933,941) 3,970,811,818

Changes in equity Net profit ------194,033,830 194,033,8301,361,778 195,395,608 Other comprehensive (loss) profit - - - 14,524,598 7,165,133 - - - 21,689,731 - 21,689,731 (262,849) 21,426,882

Total Comprehensive (loss) profit - - - 14,524,598 7,165,133 - - - 21,689,731 194,033,830 215,723,5611,098,929 216,822,490

Share issuance 48,991,490 (35,155,012) ------13,836,478 - 13,836,478 Dividends ------(211,227,754) (211,227,754) - (211,227,754) Stock option (see Note 20) ------5,059,660 - 5,059,660 - 5,059,660 - 5,059,660 Decrease due to changes in ownership interest without a loss of control ------(1,161,699) (1,161,699) - (1,161,699) (52,597) (1,214,296)

Total transactions with owners 48,991,490 (35,155,012) - - - - 5,059,660(1,161,699) 3,897,961 (211,227,754) (193,493,315) (52,597) (193,545,912)

Total Changes in equity 48,991,490 (35,155,012) - 14,524,598 7,165,133 - 5,059,660(1,161,699) 25,587,692 (17,193,924) 22,230,246 1,046,332 23,276,578

Ending balance, as of June 30, 2016 2,370,372,426491,478,332 - (1,172,585,223) 22,024,717(229,427) 24,336,259(53,638,633) (1,180,092,307) 2,312,217,5543,993,976,005112,391 3,994,088,396

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

For the six months ended June 30, 2017 2016 Cash flows from (used in) operating activities ThCh$ ThCh$

Types of revenues from operating activities Revenue from sale of goods and provision of services 6,183,765,814 6,021,805,267 Other operating activities revenue 10,299,356 9,815,326

Types of payments Payments to suppliers for supply of goods and services (5,087,487,752) (5,199,331,870) Payments to and on behalf of personnel (761,429,664) (618,894,541) Other operating payments (262,679,696) (292,107,974) Interest paid (35,641) (24,651) Interest received 1,695,234 1,380,046 Taxes paid (108,052,174) (41,788,113) Other cash inflows (outflows) (980,167) (1,922,817)

Cash flows from (used in) operating activities (continuing operations) (24,904,690) (121,069,327)

Net cash flow (used in) from operating activities (24,904,690) (121,069,327)

Cash flows (used in) from investing activities Disposal of subsidiaries and associates - 119,585,637 Acquisition of non-controlling interest and capital contributions to associate - (1,434,532) Proceeds from sales of property, plant and equipment 3,971,438 1,532,857 Purchases of property, plant & equipment (87,354,785) (82,536,824) Purchases of intangible assets (18,566,426) (21,070,474) Dividends received 7,440,975 5,174,138 Interest received 589,947 794,158 Proceeds from sale of other financial assets—mutual funds 4,818,599,159 2,527,341,280 Purchases of other financial assets—mutual funds (4,680,406,672) (2,330,951,712)

Cash flows from (used in) investing activities (continuing operations) 44,273,635 218,434,528

Net cash flow from (used in) investment activities 44,273,635 218,434,528

Cash flows from (used in) financing activities Proceeds from exercise of stock options 24,690 13,836,478

Proceeds from borrowing at long–term - - Proceeds from borrowing at short–term 116,463,815 198,316,325 Total loan proceeds from borrowing 116,463,815 198,316,325

Repayments of borrowing (46,390,696) (76,800,786) Dividends paid (85,876,558) (170,547,577) Interest paid (120,758,145) (110,963,263) Other cash outflows (2,782,767) (1,570)

Cash flows used in financing activities (continuing operations) .. (139,319,661) (146,160,393)

Net cash flow used in financing activities (139,319,661) (146,160,393)

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net increase (decrease) in cash and cash equivalents before the effects of exchange rates variations (119,950,716) (48,795,192)

Effects of variations in the exchange rate on cash and cash equivalents (4,541,559) (15,172,751)

Net decrease in cash and cash equivalents (124,492,275) (63,967,943) Cash and cash equivalents at the beginning of the period 275,219,003 268,275,126

Cash and cash equivalents at the end of the period 150,726,728 204,307,183

Incuded in cash and cash equivalents per the statement of financial situation 150,726,728 204,307,183 Incuded in the assets of the disposal group - -

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Cencosud S.A. and subsidiaries Notes to the unaudited condensed consolidated interim financial statements

1 General information

Cencosud S.A. (hereinafter “Cencosud Group,” “the Company,” “the Holding,” “the Group”) taxpayer ID number 93.834.000-5 is a public corporation with an indefinite life, with its legal residence at Avda. Kennedy 9001, 4th floor, Las Condes, Santiago, Chile.

Cencosud S.A. is a public company registered with the Chilean Superintendence of Securities and Insurance (SVS), under No.743, which shares are quoted in Chile on the Stock Brokers-Stock Exchange (Valpara’so), the Chilean Electronic Stock Exchange and the Santiago Stock Exchange; it is also quoted on the United States of America Stock Exchange (“NYSE”) in New York in the form of American Depositary Receipts (ADRs).

Cencosud S.A. is a retail operator in Latin America, which has active operations in Chile, Argentina, Brazil, Colombia and Peru, where it has developed a successful multi-format and multi-brand strategy reaching sales of ThCh$ 5,109,600,697 as of June 30, 2017.

During the year ended June 30, 2017, the Company employed an average of 135,470 employees, ending with a total number of 135,605 employees.

The Company’s operations include supermarkets, hypermarkets, home improvement stores, department stores, shopping centers, as well as real estate development and financial services, which makes it the most diversified retail company of Latin-American capital in South America with the biggest offering of square meters, it caters to the consumption needs of over 180 million customers.

Additionally, it operates other lines of business that complement the main retail operations, such as insurance brokerage, a travel agency, customer loyalty services and family entertainment centers. All of these services have gained recognition and prestige among customers, with brands that excel at quality and service.

The Company splits its equity among 2,862,551,947 shares of a single series whose main shareholders are the following:

Major shareholders as of June 30, 2017 Shares Interest % Inversiones Quinchamali Limitada 573,754,802 20.044% Inversiones Latadia Limitada 550,823,211 19.242% Inversiones Tano Limitada 287,328,548 10.038% Banco de Chile on behalf of third parties 183,205,842 6.400% Banco Itau on behalf of investors 135,881,391 4.747% Horst Paulmann Kemna 70,336,573 2.457% Provida C Pension Fund 69,652,035 2.433% Banco Santander - JP Morgan 59,169,314 2.067% Habitat C Pension Fund 56,215,913 1.964% Capital C Pension Fund 50,153,631 1.752% Cuprum C Pension Fund 46,181,031 1.613% Habitat B Pension Fund 42,566,644 1.487% Other shareholders 737,283,012 25.756% Total 2,862,551,947 100.000%

Interest of Paulmann family as of June 30, 2017 Interest % Inversiones Quinchamali Limitada 20.044% Inversiones Latadia Limitada 19.243% Inversiones Tano Limitada 10.038% Horst Paulmann Kemna 2.457% Manfred Paulmann Koepfer 0.486% Peter Paulmann Koepfer 0.492% Heike Paulmann Koepfer 0.486% Succession of Mrs. Helga Koepfer Schoebitz 0.113% Inversiones Alpa Limitada 0.002% Total 53.359%

These condensed consolidated interim financial statements of Cencosud group as of June 30, 2017, were approved by the Board of Directors in a session held on August 24, 2017.

2.1 Presentation basis

The consolidated financial statements of Cencosud S.A. have been prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).

These condensed consolidated interim financial statements for the six months ended June 30, 2017 have been prepared in accordance with IAS 34, “Interim financial reporting” and do not include all the information required for a complete set of IFRS annual financial statements. Accordingly, the condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended December 31, 2016, which have been prepared in accordance with IFRS.

The presentation of the financial statements in conformity with IFRS requires the use of certain accounting estimates, and also requires Management to exercise its judgment in the process of applying the Company’s accounting policies. Note 4 to these financial statements shows the areas in which a greater level of judgment has been applied, or where there is a higher level of complexity and therefore hypothesis and estimates are material to the financial statements.

Figures in the accompanying financial statements are expressed in thousands of Chilean pesos, as the Chilean peso is the functional and presentation currency of the Company. All values have been rounded to the nearest thousands of pesos, except where mentioned.

For the purpose of presenting comparative information, certain figures presented on the consolidated financial statements of the Group as of December 31, 2016 have been reallocated based on the presentation shown on the consolidated financial statement as of June 30, 2017.

2.2 New and amended standards adopted by the group

(a) The following standards and interpretations are compulsory for the first adoption for annual periods beginning on or after January 1, 2017.

Amendments and improvements

Amendment to IAS 7 — Statement of Cash Flows. Issued on February 2016. The amendments are intended to clarify IAS 7 to improve disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities.

Amendment to IAS 12 — Income Taxes. Issued on February 2016. The IASB had concluded that the diversity in practice around the recognition of a deferred tax asset that is related to a debt instrument measured at fair value is mainly attributable to uncertainty about the application of some of the principles in IAS 12. Therefore the amendments consist of some clarifying paragraphs and an illustrating example.

Amendment to IFRS 12 — Disclosure of Interests in Other Entities. The amendment clarifies the scope of the standard by specifying that some of the disclosure requirements in the standard apply to an entity’s interests listed in paragraph 5 that are classified as held for sale. These modifications must be applied restrospectively to the financial years beginning on or after January 1, 2017.

Management has assessed the adoption of these standards, amendments and interpretations, and it has concluded that there are no material impacts on Financial Statements of the Group.

(b) New standards, amendments and interpretations not yet adopted.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Application for annual periods Standards and interpretations Description beginning on or after: IFRS 9 “Financial Instruments” The complete version of IFRS 9 replaces most of the guidance in IAS 39. 01-01-2018 IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39.

IFRS 15 “Revenue from Contracts This standard defines a new model to recognize revenue from contracts with 01-01-2018 with Customers” costumers. The standard deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognized when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations.

IFRS 16 “Leases” Specifies how an IFRS reporter will recognise, measure, present and 01-01-2019 disclose leases. The new standard brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. Lessor accounting however remains largely unchanged and the distinction between operating and finance leases is retained. The standard also provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value.

IFRIC 22 — Foreign Currency IFRIC 22 clarifies the accounting for transactions that include the receipt or 01-01-2018 Transactions and Advance payment of advance consideration in a foreign currency. Consideration

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Application for annual periods Amandments and improvements Description beginning on or after: Amendment to IFRS 2 — Share-based The amendments to IFRS 2 clarify the classification and measurement of 01-01-2018 Payment share-based payment transactions. The amendments address several requests that the IASB and the IFRS Interpretations Committee received and that the IASB decided to deal with in one combined narrow-scope project.

Amendment to IFRS 15 — Revenue The amendments in Clarifications to IFRS 15 'Revenue from Contracts with 01-01-2018 from Contracts with Customers Customers' address three of the five topics identified (identifying performance obligations, principal versus agent considerations, and licensing) and provide some transition relief for modified contracts and completed contracts. The IASB concluded that it was not necessary to amend IFRS 15 with respect to collectability or measuring non-cash consideration. In all its decisions, the IASB considered the need to balance helping entities with implementing IFRS 15 and not disrupting the implementation process.

Amendment to IAS 40 — Investment The amendment provides guidance on transfers to, or from, investment 01-01-2018 Property properties. More specifically, the question was whether a property under construction or development that was previously classified as inventory could be transferred to investment property when there was an evident change in use.

Amendment to IAS 28 — Investments The amendment clarifies that the election to measure at fair value through 01-01-2018 in Associates and Joint Ventures profit or loss an investment in an associate or a joint venture that is held by (2011) an entity that is a venture capital organisation, or other qualifying entity, is available for each investment in an associate or joint venture on an investment-by-investment basis, upon initial recognition

Amendment to IFRS 10 — The IASB has made limited scope amendments to IFRS 10 Consolidated N/A** Consolidated Financial Statements financial statements and IAS 28 Investments in associates and joint ventures. The amendments clarify the accounting treatment for sales or contribution of assets between an investor and its associates or joint ventures. They confirm that the accounting treatment depends on whether the non-monetary assets sold or contributed to an associate or joint venture constitute a ‘business’ (as defined in IFRS 3 Business Combinations). Where the non-monetary assets constitute a business, the investor will recognise the full gain or loss on the sale or contribution of assets. If the assets do not meet the definition of a business, the gain or loss is recognised by the investor only to the extent of the other investor’s investors in the associate or joint venture. The amendments apply prospectively. ** In December the IASB decided to defer the application date of this amendment until such time as the IASB has finalised its research project on the equity method.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document These standards, amendments and interpretations are not expected to have a material impact on the Group, except for the following:

IFRS 9 - Financial Instruments

IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.

While the Group has not yet undertaken a detailed assessment of the classification and measurement of financial assets, debt instruments currently classified as available-for-sale (AFS) financial assets would appear to satisfy the conditions for classification as at fair value through other comprehensive income (FVOCI) and hence there will be no change to the recognition of such assets.

The other financial assets held by the group mainly include:

● Mutual Fund Shares ● Derivatives (hedging and economical) ● Highly liquid financial instruments, and ● Financial investments long term

The Group does not expect the new guidance to have a significant impact on the classification and measurement of these financial assets.

There will be no impact on the group's recognition for financial liabilities, as the new requirements only affect the recognition for financial liabilities that are designated at fair value through profit or loss and the group does not have liabilities with such classification. The derecognition rules have been transferred from IAS 39 Financial Instruments: Recognition and Measurement and have not been changed.

The new hedge accounting rules will align the recognition for hedging instruments more closely with the group's risk management practices. As a general rule, more hedge relationships might be eligible for hedge accounting, as the standard introduces a more principles- based approach. While the Group is yet to undertake a detailed assessment, it would appear that the Group's current hedge relationships would qualify as accounting hedges upon the adoption of IFRS 9. Accordingly, the Group does not expect a significant impact on the accounting for its hedging relationships.

The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses as is the case under IAS 39. It applies to financial assets classifies at amortized cost, debt instruments measured at FVOCI, contracts under IFRS 15 Revenue from Contracts with Costumers, lease receivables, loan commitments and certain financial guarantee contracts. While the group has not yet undertaken a detailed assessment of how its impairment provisions would be affected by the new model, it may result in an earlier recognition of credit losses.

The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extend of the Group's disclosures about its financial instruments particularly in the year of the adoption of the new standard.

IFRS 9 must be applied mandatorily for financial years commencing on or after January 1, 2018.

The Group does not intend to adopt IFRS 9 before its mandatory date. At this stage, the Group does not intend to adopt the standard before its effective date.

IFRS 15 - Revenue from Contracts with Costumers

The IASB has issued a new standard for the recognition of revenue. This will replace IAS 18 which covers contracts for goods and services and IAS 11 which covers construction contracts.

The new standard is based on the principle that revenue is recognized when control of a good or service transfers to a customer.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The standard permits a full retrospective or modified retrospective approach for adoption.

Management is currently assessing the effects of applying the new standard on the Group’s financial statements and has identified the following areas that are likely to be affected:

● Accounting for the customers loyalty program – IFRS 15 requires that the total consideration received must be allocated to the points and goods based on relative stand-alone selling prices rather than based on the residual value method; this could result in different amounts being allocated to the goods sold and deffera in the recognition of a portion of the revenue, and ● GIFT CARD - IFRS 15 allows that when it is adequately established the rate of wastage from clients, over their totalcontractual rights (breakage), the variable consideration treatment is given and a portion of such rightsis recognized as revenue; This could lead to a recognition of revenue in advance.

IFRS 15 must be applied mandatorily for financial years commencing on January 1, 2018. The expected date of adoption by the Group: January 1, 2018. At this stage, the Group is not able to estimate the impact of this new standard on the Group´s financial statements, the Group will make a more detailed assessment of the impact over the next twelve months.

IFRS 16 - Leases

IFRS 16 was issued in January 2016. It will result in almost all leases being recognized on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognized. The only exceptions are short-term and low-value leases.

The accounting for lessors will not significantly change.

The standard will affect primarily the recognition of the Group’s operating leases. As at the reporting date, the Group has non-cancellable operating leases commitments of MM $ 1,716,227. The Group is expecting to determine the extend of these commitments and the approximate amounts for the recognition of the asset, liability and retained earnings adjustment at the transition date during the first semester of 2018, based on the restrospective accumulative approach allowed by the standard.

Some of the commitments may be covered by the exception for short-term and low-value leases and some commitments may relate to arrangements that will not qualify as leases under the new IFRS 16 definitions.

IFRS 16 is mandatory for financial years commencing on or after January 1, 2019. At this stage, the Group does not intend to adopt the standard before its effective date.

2.3 Accounting policies

The accounting policies adopted are consistent with those applied during the previous financial year and corresponding interim reporting period.

Income taxes for interim periods are accounted for using the tax rate that would be applicable to expected total annual income before taxes.

2.4 Changes in accounting policies

The Company assess accounting policies frequently, and decide to change any of the adopted standards only if the change: i) is required by a new IFRS ; or ii) results in the financial statements providing reliable and more relevant information about the effects of transactions, other events or conditions on the entity's financial position, financial performance, or cash flows.

No changes in accounting policies have been adopted by the Company during for the six months ended June 30, 2017 and 2016.

On September 29, 2014, Law No. 20,780 was enacted and published in the Official Gazette, introducing various amendments to the current income tax law and taxation rules for other taxes in Chile. Under the recently enacted tax law, the income tax rate will increase to 21%, 22.5%, 24%, 25.5% and 27%, for the years 2014, 2015, 2016, 2017 and 2018 and following fiscal years, respectively, such newly enacted rates are applicable based on the Company’s adoption of the partially integrated system.

The above implies that the income tax rate in Chile is 25.5% for the 2017 fiscal year. Therefore, for the close of the financial statements as of June 30, 2017, a tax rate of 25.5% has been considered in the determination of the income tax provision in Chile.

2.6 Assets and liabilities held for sale and discontinued operations

Non current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and the sale is considered highly probable. Assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell, except forinvestment properties, financials instruments and others that are carried at fair value. An impairment loss is recognized for any initial or subsequent write down of the asset (or disposal group) to fair value less cost to sell. A gain is recognized for any subsequent increases in fair value less costs to sell of an asset ( or disposal group), but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non current asset (or disposal group) is recognized at the date of recognition. Non-current assets (including those that are part of disposal group) are notdepreciated or amortized while they are classified as held for sale.

Non current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the statement of financial position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the statement of financial position.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations, net of tax, are presented separately in the statement of profit and loss. Net cash flows attributable to the operating, investing and financing activities of discontinued operations are required to be disclosed either in the notes to the financial statements or on the face of the statements of cash flows. IFRS 5 requires that a company “re-present” its statement of comprehensive income as if the operation had been discontinued for all prior periods presented.

Assets held for sale, and associated liabilities, are detailed on note 21 to these condensed interim financial statements.

2.7 Seasonability

The Company experiences distinct seasonal sales patterns at supermarkets due to heightened consumer activity throughout the Christmas and New Year holiday season, as well as during the beginning of each school year in March. During these periods, the Company promotes the sale of non-food items particularly by discounting imported goods, such as toys throughout the Christmas holiday season, and school supplies during the back-to-school period. Conversely, the Company usually experiences a decrease in sales during the summer vacation months of January and February.

The Company does not experience significant seasonality in the home improvement sector.

Department stores have also experienced historically distinct seasonal sales patterns due to heightened consumer activity throughout the Christmas and New Year holiday season. As a result, the strongest quarter in terms of sales is the fourth quarter.

Shopping center revenues generally increase during the Christmas and New Year holiday season, reflecting the seasonal sales peak for shopping centers.

The Company is exposed to a variety of financial risks: market risk (including interest rate risk and foreign exchange rate risk), credit risk and liquidity risk.

The condensed interim consolidated financial statements do not include all financial risk management information and disclosure required in the annual financial statements, and should be read in conjunction with the Company’s annual consolidated financial statements as of December 31, 2016.

There have been no changes in the risk management policies and procedures between the dates of the annual and these interim consolidated financial statements as of June 30, 2017.

3.1. Valuation methodology (initially and subsequently).

Financial instruments that have been accounted for at fair value in the statement of financial position as of June 30, 2017 and December 31, 2016 have been measured using the methodologies as set forth in IFRS 13. These methodologies applied for each class of financial instruments are classified using the following hierarchy:

Level I: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for- sale securities) is based on quoted (unadjusted) market prices at the end of the reporting period. The quoted marked price used for financial assets held by the group is the current bid price. These instruments are included in level 1.

Level II: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level III: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

Specific valuation techniques used to value financial instruments include:

● Quoted market prices or dealer quotes for similar instruments;

● The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves;

● The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value;

● Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

Group valuation process

The Group has established control framework with respect to the measurements of fair value. This includes a valuation team that has an overall responsibility for overseeing all significant fair value measurements, including level 3 fair values, and reports directly to the regional CFO.

The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence from third parties to support the conclusion that such valuations meet the requirements of IFRS, including the fair value hierarchy in which such valuation should be classified.

Taking into account the nature and characteristics of the instruments maintained in its portfolio, the Company classifies its valuation methodologies in the three aforementioned levels. Currently, the valuation process considers internally developed valuation techniques, for which parameters and observable market inputs are used, mainly using the present value methodology.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document As of June 30, 2017 and December 31, 2016, the Group has no financial instruments that have been valuated using inputs assessed as level III, however, the procedures above are in line with the Group policies regarding the estimation and review of the inputs used in fair-valuing financial asset and recurrent and non-recurrent non-financial assets.

The tables below show the total value of each type of the financial instruments valued under each category, and its respective percentage, as of June 30, 2017 and December 31, 2016:

Table Valuation methodologies.

June 2017

Valuation method Amortized Classification Group Type Value Level I Level II Level III cost ThCh$ % % % % At fair value through profit or Mutual funds Mutual funds 80,581,582 100% - - - loss Other financial 250,927 100% - - - investments Loans and trade Cash and cash Cash balances 37,457,146 - - - 100% receivables, net equivalents Bank balances 77,071,134 - - - 100% Short-term deposits 36,198,448 - - - 100% Receivables Trade receivables, net 810,285,347 - - - 100% Receivables from Related entities, 14,378,482 - - - 100% related entities current Financial liabilities Bank loans Current 291,207,217 - - - 100% and payables Non-Current 191,657,809 - 0.1% - 99.9% Bonds payable Current 249,241,058 - - - 100% Non-Current 2,506,434,669 - 0.3% - 99.7% Other loans (lease) Current 2,495,366 - - - 100% Non-Current 17,699,326 - - - 100% Deposits and saving Current 58,156,569 - - - 100% accounts Non-Current 36,020,842 - - - 100% Debt purchase Non-Current 1,846,979 - - - 100% affiliates Other financial Current 2,482,889 - - - 100% liabilities Trade payables Current 1,530,727,505 - - - 100% Non-Current 192,911 - - - 100% Withholding taxes Current 171,223,269 - - - 100% Non-Current 3,507,733 - - - 100% Payables to related Current 15,683,885 - - - 100% entities Other financial Forward 4,204 - 100% - - liabilities Cash flow hedging Hedges Hedging derivatives 11,472,808 - 100% - - liability Fair value hedging 398,391 - 100% - - liability Cash flow hedging 247,557,467 - 100% - - asset Fair value hedging 24,284,241 - 100% - - asset

Valuation method Amortized Classification Group Type Value Level I Level II Level III cost ThCh$ % % % % At fair value through profit or Mutual funds Mutual fund shares 189,960,780 100% - - - loss Derivatives Forward 1,398,557 - 100% - - Other financial Highly liquid financial 28,629,285 100% - - - Instrument instruments Financial investments 240,874 100% - - - – long term Loans and trade Cash and cash Cash balances 52,646,980 - - - 100% receivables, net equivalents Bank balances 135,282,148 - - - 100% Short-term deposits 87,289,875 - - - 100% Trade receivables, net 879,033,383 - - - 100% Receivables from Related parties, current 28,988,176 - - - 100% related parties Financial liabilities Bank loans Current 215,393,417 - - - 100% and payables Non-Current 206,299,337 0.1% - 99.9% Bonds payable Current 127,530,284 - - - 100.0% Non-Current 2,618,875,407 0.3% - 99.7% Other loans (lease) Current 2,713,893 - - - 100% Non-Current 19,256,643 - - - 100% Deposits and saving Current 56,128,948 - - - 100% accounts Non-Current 45,030,033 - - - 100% Debt purchase Non-Current 1,722,769 - - - 100% affiliates Other financial Current 2,091,081 - - - 100% liabilities Trade payables Current 1,726,983,368 - - - 100% Non-Current 191,397 - - - 100% Withholding taxes Current 199,863,684 - - - 100% Non-Current 4,612,328 - - - 100% Payables to related parties Current 18,722,919 - - - 100%

Cash flow hedging Hedges Hedging derivatives 13,514,328 - 100% - - liabilities Fair value hedging 3,078,542 - 100% - - liabilities Cash flow hedging 264,820,710 - 100% - - assets Fair value hedging 22,299,090 - 100% - - assets

Instruments classified as Level II correspond mainly to interest rate swaps and cross currency swaps that have been valued by discounting the future cash flows stipulated in the contract for both the asset and liability component of each instrument. The structure of interest rates used to bring the future cash flows to present value is constructed based on the currency of each component and inferred from transactions involving risk-free instruments in the relevant markets.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Group recognizes transfers between levels of the fair value hierarchy at the end the reporting period during the change has occurred. As of June 30, 2017 and December 31, 2016, there have been no transfers between level I and II, and transfers out of level III to another level of fair value.

3.2. Reclassifications.

As of the end of this reporting period, the Company has not reclassified any entries in the aforementioned financial instrument categories.

The concept of liquidity risk is used by the Company to refer to financial uncertainty, at different time horizons, related to its capacity to respond to cash needs to support its operations, under both normal and exceptional circumstances.

Compared to year ended, there was no material change in the contractual undiscounted cash out flows for financial liabilities that affect the Company´s liquidity risk.

3.4 Fair value of financial assets and liabilities measured at amortized cost.

In order to estimate the fair value of debt instruments accounted for at amortized cost, the Company has estimated the cash flows from variable interest obligations using relevant swap curves. The structure of interest rates used to bring the future cash flows to present value is constructed based on the currency of each obligation and corresponds to the risk-free curve in the relevant market plus a credit spread inferred from the initial contractual conditions of each obligation.

The fair value of borrowings (bank loans and bons payables) which are classified within Level II of the fair value hierarchy, are as follows:

As of Borrowings June 30,2017 December 31,2016 ThCh$ ThCh$ Current 538,043,792 338,455,386 Non-Current 2,755,417,850 2,893,489,541 Total 3,293,461,642 3,231,944,927

The fair value of the following financial assets and liabilities approximate their carrying amount:

● Trade and other receivables

● Other current financial assets

● Cash and cash equivalents (excluding bank overdrafts)

● Trade and other payables

● The following assets and liabilities within the held-for-sale disposal group:

– Cash and cash equivalents

– Other current assets

– Trade and other payables

– Borrowings

– Other current liabilities

The estimates and criteria used are continuously assessed and are based on prior experience and other factors, including the expectation of occurrence of future events that are considered reasonable according to the circumstances.

The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed interim financial statements, the significant judgments made by management in applying the group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2016, with the exception of changes in estimates that are required in determining the provision for income taxes and changes derived from adoption of new pronouncements as mentioned in Note 2.5.

4.1 Investment property a) Fair value measurement for lands

The fair value for land was determined by the Company’s finance department, consulting with external and independent property examiners who have the appropriate recognized professional qualification and recent experience in the location and category of the property being valued.

The methodology used in determining the fair value of lands was the market approach, which consists of determining the fair value based on recent transactions occurred in the market.

This measurement corresponds to level II of the fair value hierarchy. b) Fair value measurements for investment properties other than land.

The Company’s finance department is responsible for determining fair value measurements included in the financial statements, including Level 3 fair values of investment properties. The Company’s finance department includes a valuations team that prepares a valuation for each investment property every quarter. The valuation team reports directly to the Chief Financial Officer (CFO) and the Audit Committee (AC).Discussions of valuation processes, key inputs and results are held between the CFO, AC and the valuation team at least once every quarter, in line with the Company’s quarterly reporting dates.

The fair value measurement for this type of investment has been categorized as a level III fair value based on the inputs used in the valuation technique. Investment properties are valued on a highest and best use basis. Changes in Level 3 fair values are analyzed at each reporting date during the quarterly valuation discussions between the CFO, AC and the valuation team. As part of this discussion, the team presents a report that explains the reasons for the fair value movements.

For all of the Company’s investment properties, the current use is considered to be the highest and best use.

The Company’s policy is to recognize transfers into and transfers out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer. There were no transfers in or out of Level 3 fair value measurements for investment properties during the period, nor transfers between Level 1 and Level 2 of the fair value hierarchy.

For investment property the methodology of the discounted future cash flows uses a country-specific WACC post- tax rate, measured in real terms and differentiated by country. To this effect, a calculation is performed to obtain the net revenues that correspond to the lease income minus the direct costs and operating expenses. Additionally, the projected cash flows used the historical information of the recent years and the projected macroeconomic variables that will affect each country.

WACC rate as of Country 6/30/2017 12/31/2016

Chile 6.05% 6.19% Argentina 12.09% 12.27% Peru 6.60% 6.75% Colombia 6.96% 7.03%

The cash flows are calculated in a scenario of moderated growth for those investment properties that have reached the expected maturity level and the main variables used are:

1. Determination of the Discount Rate

The discount rate is reviewed quarterly for each country and consists of the following factors: a) BETA: Because the American market presents a greater number of comparable companies within this industry, using betas of companies in that country. b) Risk-free rate: It draws on the U.S. Treasury rate at 30 years (30yr T-Bond) c) Risk premium: Estimated on long-term returns of the stock market and the country risk of each transaction, estimated by the Credit Default Swap to 10 years (10yr CDS). In the case of Argentina’s country risk used is the average of the last three years. d) Leverage Ratio: Estimated as of BETA referring them on 66.4% equity and 33.6% debt. e) Tax rate: We use the tax rate in effect in each country f) Spread: The international bond spread of Cencosud is used to estimate the return on debt which is similar to the Industry spread. With all these factors we estimate the discount rate (WACC) nominal and real, the latter being used as the flow is estimated at UF (Unidad de Fomento) in Chile, or adjusted for inflation in Peru and Argentina

2. Revenue growth:

The evolution of income depends on the property, but remains between 0.5% and 1.0% annual real growth, except those newly opened malls whose maturation does expect superior performance improved in the first years of operation. The revenue projection is reviewed quarterly so that it is aligned to the budget approved by the board in the short term and that their expectations of long-term trends are in line with the life cycle in which the asset is (Shopping).

3. Growth in costs and expenses:

As income, change in expenditure depends on the property but always reflects the standard structure resulting from the operation of such properties and operating agreements signed with tenants. These are also reviewed quarterly to be aligned with the budget and expected evolution for each Shopping.

4. Investment Plan:

For each shopping center, the Company reviews whether the investment plans is in line with the characteristics of each property and the life cycle in which they are placed.

Based on the points described above, the estimated available flow projection thirty-year term, after which is estimated a perpetuity. The present value of these flows determines the fair value of the investment property.

5. Valuation technique and Inter-relationship between key unobservable inputs.

Valuation technique (Discounted cash flows): The valuation model considers the present value of the net cash flows to be generated from the property taking into account expected revenue growth, occupancy rates, other cost and expenses not paid by tenants. The expected net cash flows are discounted using risk-adjusted discount rates (see above on “determination of discount rate”). Among other factors, the discount rate estimation considers the quality of a building and its location, tenant credit and lease terms.

Malls Chile Expected revenue growth (real) 0.5% - 1% Occupancy rate 90% - 100%

Argentina Expected revenue growth (real) 0.5% - 1% Occupancy rate 90% - 100%

Office Chile Expected revenue growth (real) 0.5% - 1% Occupancy rate (1st through 5th year) 50% - 90%% Thereafter 80% - 98%

(*) The group concentrates 89% of the total of the investment properties in Chile and Argentina.

The estimated fair value of the investment properties would increase (decrease) if: ● Risk-adjusted discount rate were lower (higher) ● Expected revenue growth were higher (lower) ● The occupancy rate were higher (lower)

The composition of this item as of June 30, 2017 and December 31, 2016 includes the following:

As of June 30, December 31, Other financial assets, current 2017 2016 ThCh$ ThCh$ Mutual Funds units (*) 80,581,582 189,960,780 Hedging derivatives - 1,398,557 Highly liquid financial instruments - 28,629,285 Total other financial assets, current 80,581,582 219,988,622

As of June 30, December 31, Other financial assets, non-current 2017 2016 ThCh$ ThCh$ Hedging derivatives 271,841,708 287,119,800 Financial investments Long term 250,927 240,874 Total other financial assets, non-current 272,092,635 287,360,674

(*) Mutual Funds units are mainly fixed income investments.

Trade receivables and other receivables as of June 30, 2017 and December 31, 2016 are as follows:

As of December 31, Trade receivables and other receivables net, current June 30, 2017 2016 ThCh$ ThCh$ Trade receivables net, current 135,052,777 187,736,950 Credit card receivables net, current 447,204,172 409,219,883 Other receivables, net, current 209,813,956 270,182,844 Total 792,070,905 867,139,677

As of December 31, Trade receivables and other receivables, net, non-current June 30, 2017 2016 ThCh$ ThCh$ Trade receivables net, non-current - 373,386 Credit card receivables net, non-current 14,468,103 8,412,427 Other receivables, net, non-current 3,746,339 3,107,893 Total 18,214,442 11,893,706

As of December 31, Trade receivables and other receivables, gross, current June 30, 2017 2016 ThCh$ ThCh$ Trade receivables gross, current 144,457,028 201,676,904 Credit card receivables gross, current 471,162,387 428,296,390 Other receivables gross, current 225,839,229 280,824,236 Letters of credit loans - 158,572 Total 841,458,644 910,956,102

As of December 31, Trade receivables and other receivables, gross, non-current June 30, 2017 2016 ThCh$ ThCh$ Trade receivables gross, non-current - 373,386 Credit card receivables gross, non-current 14,468,103 8,412,427 Other receivables gross, non-current 3,746,339 3,107,893 Total 18,214,442 11,893,706

As of December 31, Trade receivables and other receivables close to maturity June 30, 2017 2016 ThCh$ ThCh$ Less than three months 571,909,810 645,374,201 Between three and six months 93,810,479 88,253,127 Between six and twelve months 72,382,902 73,541,986 In more than twelve months 18,214,442 11,893,706 Total 756,317,633 819,063,020

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The maturity of past due trade receivables as of June 30, 2017 and December 31, 2016 is as follows:

As of December 31, Trade receivables past due but not impaired June 30, 2017 2016 ThCh$ ThCh$ Past due less than three months 79,260,141 77,517,208 Past due between three and six months 10,094,649 10,223,002 Past due between six and twelve months 6,350,678 3,325,672 Past due in more than twelve months 7,649,985 12,720,906 Total 103,355,453 103,786,788

The movement of the bad debt allowance is as follows:

As of December 31, Change in bad debt allowance June 30, 2017 2016 ThCh$ ThCh$ Initial balance 43,816,425 44,636,783 Increase in provision 75,610,417 57,105,655 Utilized provision (12,675,964) (26,885,538) Decrease in provision (57,363,139) (31,040,475) Total 49,387,739 43,816,425

The maximum exposure to credit risk at the date of the report is the book value in each category of the trade account; Cencosud Group does not request collateral as a guarantee.

Transactions with related companies are based on immediate payment or collection or with a term of up to 30 days, and are not subject to special conditions. These operations comply with what is established in articles 44 and 49 of Law N° 18,046 that regulates the Corporations. It is noteworthy that the related party transactions are in accordance with IAS 24 (Revised) “Related Parties”. The Company has a policy to disclose all transactions performed with related parties during the period.

7.1 Trade receivables from related entities

The composition of the item as of June 30, 2017 and December 31, 2016 is as follows:

Receivables from related entities Balance as of TransactionTransaction Nature of Current Non Current Tax ID Number Company description term relationship Currency 6/30/2017 12/31/2016 6/30/2017 12/31/2016 ThCh$ ThCh$ CAT Administradora de Trade 99.500.840-8 Tarjetas S.A. receivable Current Associate Chilean Pesos 9,587,721 20,226,071 - - CAT Administradora de Dividends 2,069,975 4,135,701 - - 99.500.840-8 Tarjetas S.A. receivable Current Associate Chilean Pesos CAT Corredores de Seguros Trade 371,722 443,446 - - 77.218.570-7 y Servicios S.A. receivable Current Associate Chilean Pesos CAT Corredores de Seguros Dividends 387,532 370,903 - - 77.218.570-7 y Servicios S.A. receivable Current Associate Chilean Pesos Dividends 180,447 487,097 - - 76.388.146-6 Operadora de Procesos S.A. receivable Current Associate Chilean Pesos Trade 1,242,863 2,624,104 - - 76.388.146-6 Operadora de Procesos S.A. receivable Current Associate Chilean Pesos Dividends 512,361 682,020 - - 76.388.155-5 Servicios Integrales S.A. receivable Current Associate Chilean Pesos Trade 25,861 18,834 - - 76.388.155-5 Servicios Integrales S.A. receivable Current Associate Chilean Pesos Total 14,378,482 28,988,176 - -

7.2 Trade payables to related entities

The composition of the item as of June 30, 2017 and December 31, 2016 is as follows:

Payables to related entities Balance as of TransactionTransaction Nature of Current Non Current Tax ID number Company description term relationship Currency 6/30/2017 12/31/2016 6/30/2017 12/31/2016 ThCh$ ThCh$ ThCh$ Fund Peruvian - Loyalti Del Perú S.A.C. transfer Current Associate New Sol 967,690 675,399 - - CAT Administradora de Trade 99.500.840-8 Tarjetas S.A. payable Current Associate Chilean Pesos 13,963,527 16,765,170 - - CAT Corredores de Seguros Trade 77.218.570-7 y Servicios S.A. payable Current Associate Chilean Pesos 13,345 243,112 - - Trade 76.388.146-6 Operadora de Procesos S.A. payable Current Associate Chilean Pesos 700,390 989,095 - - Trade 76.388.155-5 Servicios Integrales S.A. payable Current Associate Chilean Pesos 38,933 50,143 - - Total 15,683,885 18,722,919 - -

The operations and its impact on profit and loss are presented for the years ended June 30, 2017 and 2016, as follows:

Transactions Impact to Impact to profit and profit and loss loss Transaction (charge/ (charge/ Tax ID Number Company Nature of relationship description Currency Country 6/30/2017 credit) 6/30/2016 credit) ThCh$ ThCh$ ThCh$ ThCh$ 3.294.888-k Horst Paulmann Kemna. Chairman Dividends paid Chilean pesos Chile 2,110,097 - 4,220,195 - 4.580.001-6 Helga Koepfer Schoebitz. Shareholder Dividends paid Chilean pesos Chile 93,014 - 186,029 - 76.425.400-7 Inversiones Tano Ltda. Shareholder Dividends paid Chilean pesos Chile 8,619,856 - 27,472,788 - 86.193.900-6 Inversiones Quinchamali Ltda. Shareholder Dividends paid Chilean pesos Chile 17,212,644 - 34,425,288 - 96.802.510-4 Inversiones Latadia Ltda. Shareholder Dividends paid Chilean pesos Chile 16,524,696 - 33,049,393 - 7.012.865-9 Manfred Paulmann Koepfer Shareholder Dividends paid Chilean pesos Chile 375,572 - 751,144 - 8.953.509-3 Peter Paulmann Koepfer Shareholder Dividends paid Chilean pesos Chile 373,397 - 746,794 - 8953510-7 Heike Paulmann Koepfer Shareholder Dividends paid Chilean pesos Chile 368,708 - 737,417 - Inmobiliaria Mall Viña Del Mar 96.863.570-0 S.A. Associate Leases paid Chilean pesos Chile - - 1,407,010 (1,407,010) Inmobiliaria Mall Viña Del Mar 96.863.570-0 S.A. Associate Utilities Paid Chilean pesos Chile - - 955,675 (955,675) Inmobiliaria Mall Viña Del Mar 96.863.570-0 S.A. Associate Sale of goods Chilean pesos Chile - - 15,791 15,791 77.209.070-6 Viña Cousiño Macul S.A. Common director Merchandise buying Chilean pesos Chile 178,450 (178,450) 369,462 (369,462) 92.147.000-2 Wenco S.A. Common director Merchandise buying Chilean pesos Chile 1,502,520 (1,502,520) 1,409,848 (1,409,848) 92.147.000-2 Wenco S.A. Common director Sale of goods Chilean pesos Chile - - 5,536 5,536 76.076.630-5 Maxi Kioskos Chile S.A. Company’s Director Leases collected Chilean pesos Chile 323,779 323,779 199,211 199,211 76.076.630-5 Maxi Kioskos Chile S.A. Company’s Director Utilities collected Chilean pesos Chile 158,262 158,262 5,405 5,405 78.410.320-KImp y Comercial Regen Ltda. Company’s Director Merchandise buying Chilean pesos Chile 167,893 (167,893) 159,258 (159,258) 78.410.320-KImp Y Comercial Regen Ltda. Company’s Director Leases collected Chilean pesos Chile 123,903 123,903 118,849 118,849 78.410.320-KImp Y Comercial Regen Ltda. Company’s Director Sale of goods Chilean pesos Chile 15,796 15,796 9,740 9,740 Common expenses 78.410.320-KImp Y Comercial Regen Ltda. Company’s Director collected Chilean pesos Chile 47,222 47,222 48,347 48,347 Company, director 79.595.200-4 Adelco Santiago Ltda. relationship Goods purchases Chilean pesos Chile 13,595 13,595 - - 88.983.600-8 Teleductos S.A. Common director Leas collected Chilean pesos Chile 21,971 21,971 21,363 21,363 88.983.600-8 Teleductos S.A. Common director Services provided Chilean pesos Chile 338,016 (338,016) 460,973 (460,973) Company, director 92.491.000-3 Labsa Inversiones Ltda. relationship Leases paid Chilean pesos Chile 259,250 (259,250) 12,855 (12,855) 93.737.000-8 Manquehue Net S.A. Common director Services provided Chilean pesos Chile 10,482 (10,482) 28,301 (28,301) 96.566.940-KAgencias Universales S.A. Common director Services provided Chilean pesos Chile 17,158 (17,158) 2,882 (2,882) 96.566.940-KAgencias Universales S.A. Common director Sale of goods Chilean pesos Chile 6,053 6,053 2,659 2,659 Empresa Nacional de 92.580.000-7 Telecomunicaciones S.A. Common director Services provided Chilean pesos Chile 229,293 (229,293) 517,130 (517,130) Empresa Nacional de 92.580.000-7 Telecomunicaciones S.A. Common director Leas collected Chilean pesos Chile 24,279 24,279 - - 90.193.000-7 Empresa El Mercurio.S.A.P. Common director Leases paid Chilean pesos Chile 34,187 34,187 67,075 67,075 Common expenses 90.193.000-7 Empresa El Mercurio.S.A.P. Common director collected Chilean pesos Chile 6,858 6,858 - - 90.193.000-7 Empresa El Mercurio.S.A.P. Common director Services provided Chilean pesos Chile 13,953 13,953 43,724 43,724 90.193.000-7 Empresa El Mercurio.S.A.P. Common director Services received Chilean pesos Chile 1,611,506 (1,611,506) 1,375,746 (1,375,746) 96.628.870-1 Entel Telefon’a Local S.A. Common director Services provided Chilean pesos Chile 7,524 (7,524) 9,495 (9,495) Entel PCS Telecomunicaciones 96.806.980-2 S.A. Common director Services provided Chilean pesos Chile 98,288 (98,288) 461,677 (461,677) Entel PCS Telecomunicaciones 96.806.980-2 S.A. Common director Services provided Chilean pesos Chile 2,135,577 (2,135,577) 1,183,540 (1,183,540)

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Entel PCS Telecomunicaciones 96.806.980-2 S.A. Common director Lease collected Chilean pesos Chile 385,082 385,082 451,286 451,286 Entel PCS Telecomunicaciones 96.806.980-2 S.A. Common director Services provided Chilean pesos Chile 73,266 73,266 34,220 34,220 Cia Nacional de Telefonos,Telefònica del Sur 96.566.940-KS.A Common director Services provided Chilean pesos Chile 761 (761) 822 (822) Cia Nacional de Telefonos,Telefònica del Sur 96.566.940-KS.A Common director Sale of goods Chilean pesos Chile - - 4,016 4,016 Industria Productos 96.628.870-1 Alimenticios S.A. Common director Merchandise buying Chilean pesos Chile 581,722 (581,722) 330,746 (330,746) 79.675.370-5 Assets- Chile S.A Common director Sale of goods Chilean pesos Chile - - 3,458 3,458 Company, director 70.649.100-7 Centros de Estudios Pùblicos relationship Services provided Chilean pesos Chile - - 834 (834) Company, director O-E JetAviation Flight Services Inc. relationship Services provided US Dollar Chile 409,920 (409,920) 846,375 (846,375) 92434000 Besalco S.A Common director Services provided Chilean pesos Chile 1,611 (1,611) 3 (3) Company, director 88.417.000-1 Sky Airline S.A. relationship Leases collected Chilean pesos Chile - - 4,775 4,775 CAT Administradora de Cencosud Card 99.500.840-8 Tarjetas S.A. Associate sales Chilean pesos Chile 374,890,298 10,053,321 339,886,055 9,649,654 CAT Administradora de Statements 99.500.840-8 Tarjetas S.A. Associate collection Chilean pesos Chile 559,952,322 - 494,927,785 - CAT Administradora de 99.500.840-8 Tarjetas S.A. Associate Leases collected Chilean pesos Chile 9,060 - 58,606 58,606 CAT Administradora de 99.500.840-8 Tarjetas S.A. Associate Sale of goods Chilean pesos Chile - - 6,183 6,183 CAT Administradora de 99.500.840-8 Tarjetas S.A. Associate Gift Cards buying Chilean pesos Chile 27,283 - 213,791 - CAT Corredores de Seguros y 77.218.570-7 Servicios S.A. Associate Merchandise buying Chilean pesos Chile - - 182,317 182,317 CAT Corredores de Seguros y Financial retail 77.218.570-7 Servicios S.A. Associate income Chilean pesos Chile 43,721 - 96,252 96,252 76.388.155-5 Servicios Integrales S.A. Associate Merchandise buying Chilean pesos Chile - - 3,053 3,053 76.388.155-5 Servicios Integrales S.A. Associate Gift Cards buying Chilean pesos Chile 18,410 - 28,970 28,970 Financial retail 76.388.155-5 Servicios Integrales S.A. Associate income Chilean pesos Chile 43,721 - 96,252 96,252 Commissions 76.388.146-6 Operadora de Procesos S.A. Associate payment Chilean pesos Chile 1,958,881 1,958,881 1,660,034 (1,660,034)

The Board of Directors as of June 30, 2017 is comprised of the following people:

Board of directors Role Profession Horst Paulmann Kemna Chairman Businessman Heike Paulmann Koepfer Director Commercial Engineer Peter Paulmann Koepfer Director Commercial Engineer Roberto Oscar Phillips Director National Public Accountant Cristián Eyzaguirre Johnston Director Economist Richard Büchi Buc Director Civil Engineer David Gallagher Patrickson Director Businessman Julio Moura Neto Director Engineer Mario Valcarce Durán Director Commercial Engineer

Company`s Key Management is composed by Corporate Managers and Division Managers, who have the authority and responsibility to plan, direct and control the company's activities, either directly or indirectly.

7.5 Board of Directors compensation

In accordance with Article 33 of Law N° 18,046 in regards to Corporations, the Ordinary Shareholders’ Meeting held on April 28, 2017, set the following amounts for the 2017 period:

● Fees paid for attending Board sessions: payment of UF 330 each month for those holding the position of Director of the Board and twice this amount for the President of the Board, if and only if they attend a minimum of 10 ordinary sessions each year,

● Fees paid for attending the Directors’ Committee: payment to each Director of UF 110 each month,

The details of the amount paid to Directors for the six months ended June 30, 2017 and 2016 are as follows:

June 30, June 30, Name Role 2017 2016 ThCh$ ThCh$ Horst Paulmann Kemna Chairman 104,965 102,371 Heike Paulmann Koepfer Director 52,483 51,186 Peter Paulmann Koepfer Director 52,483 51,186 Cristián Eyzaguirre Johnston Director 52,483 51,186 Roberto Oscar Philipps Director 69,977 68,247 David Gallagher Patrickson Director 69,977 68,247 Julio Moura Director 52,483 51,186 Richard Bûchi Buc Director 69,977 68,247 Mario Valcarce Durán Director 69,977 22,899 Total 594,805 534,755

7.6 Compensation paid to senior management

June 30, June 30, Key management compensation 2017 2016 ThCh$ ThCh$ Salary and other short term employee benefits 3,839,391 3,575,408 Share based payments 896,597 867,643 Total 4,735,988 4,443,051

The Group has established an incentive plan, which rewards management for the achievement of individual objectives in the achievement of the company’s results. These incentives are structured as a minimum and a maximum of gross compensation and are paid once a year.

The composition of this item as of June 30, 2017 and December 31, 2016 is as follows:

As of December 31, Inventory category June 30, 2017 2016 ThCh$ ThCh$ Raw materials 4,582,185 4,740,484 Goods 1,319,303,766 1,293,309,256 Provisions (141,219,767) (148,763,726) Total 1,182,666,184 1,149,286,014

The composition of inventories by business line as of June 30, 2017 and December 31, 2016 is as follows:

As of June 30, 2017 Department Home Inventory category stores Supermarkets improvement Total ThCh$ ThCh$ ThCh$ ThCh$ Raw material 672,515 3,909,670 - 4,582,185 Goods 208,950,466 721,825,259 247,308,274 1,178,083,999 Total 209,622,981 725,734,929 247,308,274 1,182,666,184

As of December 31, 2016 Department Home Inventory category stores Supermarkets improvement Total ThCh$ ThCh$ ThCh$ ThCh$ Raw material 1,164,458 3,576,026 - 4,740,484 Goods 192,143,210 697,409,780 254,992,540 1,144,545,530 Total 193,307,668 700,985,806 254,992,540 1,149,286,014

The Company periodically assesses its inventories at their net realizable value, by separating the inventory for each line of business and verifying the age, inventory turnover, sales prices and seasonality. Any adjustments are carried against income of the period.

The goods included in inventory are valued at the lower between their purchase price or production cost, net of allowance for obsolescence, and their net realizable value.

The carrying amount of inventories carried at June 30, 2017 and December 31, 2016 to its net realizable value less selling costs, provides for:

Current Inventories: Inventories at net realizableas of Net realizable value movements 6/30/2017 12/31/2016 ThCh$ ThCh$ Beginning Balance 49,219,377 66,062,640 Increase of Inventory to NRV (Net Realizable Value) 8,536,087 8,671,880 Decrease of Inventory to NRV (Net Realizable Value) (4,403,635) (25,515,143) Total 53,351,829 49,219,377

For the six months ended June 30, Additional information inventory 2017 2016 ThCh$ ThCh$ Cost of inventories recognized as expenses during the year 3,372,529,717 3,303,681,799

Provision movements:

Balance as of Provisions 6/30/2017 12/31/2016 ThCh$ ThCh$ Beginning Balance 148,763,726 133,510,682 Amount of inventory reductions 93,232 16,568,409 Amount of reversals of inventory reductions (7,637,191) (1,315,365) Total 141,219,767 148,763,726

The circumstances or events that led to the reversal of any write-down of inventories as of June 30, 2017 and December 31, 2016 relate mainly to settlements and auctions recovering amounts higher than the estimated net realizable value for inventories.

The Company has not given inventories as collaterals at the end of the periods reported.

Intangible assets are mainly composed of software and brands acquired in business combinations. The detail as of June 30, 2017 and December 31, 2016 is as follows:

As of December 31, Intangibles assets other than goodwill net June 30, 2017 2016 ThCh$ ThCh$ Finite life intangible assets, net 142,150,573 140,640,088 Indefinite life intangible assets, net 269,239,226 267,528,026 Intangible assets, net 411,389,799 408,168,114 Patents, Trade Marks and Other Rights, Net 269,239,226 267,528,026 Software (IT) 111,938,826 109,301,075 Other Identifiable Intangible Assets, net (*) 30,211,747 31,339,013 Identifiable Intangible Assets, Net 411,389,799 408,168,114

As of December 31, Intangibles assets other than goodwill gross June 30, 2017 2016 ThCh$ ThCh$ Finite life intangible assets, Gross 309,192,570 291,475,386 Indefinite life intangible assets, Gross 269,239,226 267,528,026 Intangible Assets, Gross 578,431,796 559,003,412 Patents, Trade Marks and Other Rights, Gross 269,239,226 267,528,026 Software (IT) 257,484,931 239,383,522 Other Identifiable Intangible Assets, Gross (*) 51,707,639 52,091,864 Identifiable Intangible Assets, Gross 578,431,796 559,003,412

As of December 31, Accumulated amortization and value impairment June 30, 2017 2016 ThCh$ ThCh$ Finite life intangible assets (167,041,997) (150,835,298) Indefinite life intangible assets - - Intangible Assets, Gross (167,041,997) (150,835,298) Software (IT) (145,546,105) (130,082,447) Other Identifiable Intangible Assets (*) (21,495,892) (20,752,851) Accumulated amortization and value impairment (167,041,997) (150,835,298)

(*) Other identifiable intangible assets mainly correspond to customer’s data base.

The Group performs an annual recoverability analysis, according to the described criteria in note 2.11 “under Impairment loss of non- financial assets IAS 36 “impairment of assets.”.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The detail of the useful lives applied to intangible assets as of June 30, 2017 and December 31, 2016 is as follows:

Estimated useful lives or amortization rates used Minimum life Maximum life Development costs 1 7 Patents, Trade Marks and Other Rights Indefinite Indefinite Software (IT) 1 7 Other identifiable Intangible Assets 1 5

The movement of intangible assets for the six months ended June 30, 2017 is the following:

Patents, Other trademarks identifiable and other Applications intangible Intangible Intangible movements rights (IT) assets assets, net ThCh$ ThCh$ ThCh$ ThCh$ Initial balance as of January 1, 2017 267,528,026 109,301,075 31,339,013 408,168,114 Additions - 19,766,816 - 19,766,816 Retirements - (887,106) - (887,106) Amortization - (15,463,658) (743,041) (16,206,699) Decrease in foreign exchange 1,711,200 (778,301) (384,225) 548,674 Balance at June 30, 2017 269,239,226 111,938,826 30,211,747 411,389,799

The movement of intangible assets as of and for the year ended December 31, 2016 is the following:

Patents, Other trademarks identifiable and other Applications intangible Intangible Intangible movements rights (IT) assets assets, net ThCh$ ThCh$ ThCh$ ThCh$ Initial balance as of January 1, 2016 267,839,511 103,417,708 30,492,198 401,749,417 Additions - 37,671,772 - 37,671,772 Retirements - (1,517,096) - (1,517,096) Amortization - (29,772,784) (1,335,738) (31,108,522) Decrease in foreign exchange (311,485) (498,525) 2,182,553 1,372,543 Balance at December 31, 2016 267,528,026 109,301,075 31,339,013 408,168,114

The detail of the amounts of identifiable intangible assets that are individually significant as of June 30, 2017 and December 31, 2016 is as follows:

Book Value Individually significant Book Value December Remaining amortization Country of identifiable Intangible assets June 2017 2016 period origin Segment ThCh$ ThCh$ Paris Brand 120,754,313 120,754,313 Indefinite Chile Department stores Johnson’s Brand 15,501,628 15,501,628 Indefinite Chile Department stores Pierre Cardin License 171,584 171,584 Defined Chile Department stores Wong Brand 32,600,204 31,840,410 Indefinite Peru Supermarkets Metro Brand 71,127,717 69,469,986 Indefinite Peru Supermarkets Bretas Brand 16,846,608 17,255,743 Indefinite Brazil Supermarkets Perini Brand 754,329 772,648 Indefinite Brazil Supermarkets Prezunic Brand 11,482,843 11,761,714 Indefinite Brazil Supermarkets Total 269,239,226 267,528,026

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The charge to the profit and loss statement for amortization of intangibles for the six months ended June 30, 2017 and 2016 are detailed below:

For the six months ended June 30, Item line in statement of profit and loss which includes amortization of identifiable Intangible assets 2017 2016 ThCh$ ThCh$ Administrative expenses 16,206,699 13,088,964 Total 16,206,699 13,088,964

As of June 30, 2017 and December 31, 2016, there are no relevant intangible assets encumbered. There are also no restrictions on ownership of them.

As of June 30, 2017 and December 31, 2016, there are no commitments to acquire intangible assets.

No significant intangible assets that have been fully amortized are in use as of As of June 30, 2017 and December 31, 2016.

The goodwill represents the excess of the acquisition cost, over the fair value of the Group’s interest in the identifiable net assets of the subsidiary/associate as of the date of acquisition. Goodwill is allocated to each store or group of stores, as appropriate, in each country and operating segment (CGUs cash generating units).

10.1 Measuring recoverable value of the Goodwill,

Goodwill is assessed at least annually. Valuations at interim periods could be done, if there are any signs that the carrying value of our goodwill may not be recoverable. These signs may include a significant change in the economic environment affecting business, new laws, operating performance indicators, competition movements, or the transfer of an important part of a cash-generating unit (CGU).

To check whether goodwill has suffered an impairment loss of value, the company compares the carrying amount of the assets, against their recoverable value. We may recognize an impairment loss if the carrying amount of the asset excess its recoverable amount. The Group believes that value in use approach using the discounted cash flow method, is the most reliable way to determine the recoverable value of the CGU method.

Reversal of an impairment loss for goodwill is prohibited.

10.2 Goodwill by segment and country,

The following table details goodwill balances and movements by operating segment and country as of June 30, 2017 and December 31, 2016:

Increase As of (decrease) December 31, foreign As of Goodwill per operating segment and country 2016 Impairment exchange June 30, 2017 ThCh$ ThCh$ ThCh$ Real Estate & Shopping—Argentina 89,569 - (4,915) 84,654 Supermarkets—Chile 106,991,957 - - 106,991,957 Supermarkets—Brazil 397,062,475 - (9,309,906) 387,752,569 Supermarkets—Peru 264,355,612 - 6,235,239 270,590,851 Supermarkets— Colombia 439,366,277 - - 439,366,277 Financial services – Colombia 52,305,509 - - 52,305,509 Shopping Centers – Colombia 31,383,305 - - 31,383,305 Home Improvement—Argentina 1,377,864 - (75,607) 1,302,257 Home Improvement—Chile 1,227,458 - - 1,227,458 Department stores—Chile 138,159,463 - - 138,159,463 Total 1,432,319,489 - (3,155,189) 1,429,164,300

The following table details goodwill balances and movements by operating segment and country as of December 31, 2015 and December 31, 2016:

Increase As of (decrease) As of December 31, foreign December 31, Goodwill per operating segment and country 2015 Impairment exchange 2016 ThCh$ ThCh$ ThCh$ Real Estate & Shopping—Argentina 115,986 - (26,417) 89,569 Supermarkets—Chile 106,991,957 - - 106,991,957 Supermarkets—Brazil 343,976,582 - 53,085,893 397,062,475 Supermarkets—Peru 275,687,596 - (11,331,984) 264,355,612 Supermarkets— Colombia 439,366,277 - - 439,366,277 Financial services – Colombia 52,305,509 - - 52,305,509 Shopping Centers – Colombia 31,383,305 - - 31,383,305 Home Improvement—Argentina 2,477,939 - (1,100,075) 1,377,864 Home Improvement—Chile 1,227,458 - - 1,227,458 Department stores—Chile 138,159,463 - - 138,159,463

a) Discount rate

The real discount rate applied to annual test conducted in September 2016, was estimated based on an average cost of capital rate historical data, with a leverage of 31% and considering as reference the major competitors in the industry. Different discount rates are used in each of the countries where the Company operates depending on the associated risk. See table below:

2016

Segment and Country Chile Argentina Peru Colombia Brazil % % % % % Supermarkets 9.01 - 10.08 9.44 9.97 Home Improvement 8.41 - - - - Department stores 8.84 24.84 - - -

b) Other assumptions

The Group has defined a financial model which considers the revenues, expenditures, cash flow balances, net tax payments and capital expenditures on a five years period (2017-2021), and perpetuity beyond this tranche. As an exception, the Supermarkets – Colombia segment has been forecasted in an eight years horizon, as a result of the recent inclusion of the Jumbo and Metro brands. These brands are on a pathway to maturity and they have extended room for increase their sales by square meter, getting close to regional and local averages.

The financial projections to determine the net present value of future cash flows are modeled considering the principal variables that determine the historic flows of each group of CGU and the budgets approved by the Board. Conservative growth rates are used for this purpose, which fluctuate from 0% to 5% annual average for the first five year of the projections and the terminal growth rates are between 0.5% and 1%, beyond fifth year, taking into account the maturity of each segment. Higher growth rates may be assigned depending on the business performance in each country, and their periods of stabilization and maturity.

The most sensitive variables in these projections are the discount rates applied in determining the net present value of projected cash flows, operating costs, and market prices of the goods and services traded.

Sensitizations tests were applied for the group of CGUs, (considering the following reasonable scenarios:

● EBITDA margin would have been 5% lower, than management´s estimates, or ● Perpetuity growth rate would have been 10% lower, than management´s estimates, or ● the estimated cost of capital used in determining the discount rate, would have been 5% higher, than management´s estimates,

After considering the mentioned scenarios in isolation, there were no reasonably possible changes in any of the key assumptions that would have resulted in an impairment write-down.

As of June 30, 2017 the Company has not identified any signs that could indicate that the carrying amount of the goodwill may not be recoverable.

11.1 The composition of this item as of June 30, 2017 and December 31, 2016 is as follows:

As of December 31, Property, plant and equipment categories, net June 30, 2017 2016 ThCh$ ThCh$ Construction in progress 73,670,710 66,402,237 Land 639,569,718 659,605,782 Buildings 1,044,260,294 1,048,864,332 Plant and equipment 223,576,329 219,967,327 Information technology equipment 38,341,676 36,328,354 Fixed installations and accessories 293,166,767 304,243,709 Motor vehicles 596,438 670,349 Leasehold improvements 199,459,942 234,231,790 Other property plant and equipment 8,404,449 8,479,693 Totals 2,521,046,323 2,578,793,573

As of December 31, Property, plant and equipment categories, gross June 30, 2017 2016 ThCh$ ThCh$ Construction in progress 73,670,710 66,402,237 Land 639,569,718 659,605,782 Buildings 1,310,182,022 1,299,194,334 Plant and equipment 612,521,244 595,558,141 Information technology equipment 162,538,263 152,482,771 Fixed installations and accessories 780,038,051 751,739,889 Motor vehicles 4,991,630 5,099,000 Leasehold improvements 302,921,130 329,887,733 Other property plant and equipment 13,722,258 13,779,119 Totals 3,900,155,026 3,873,749,006

As of December 31, Accumulated depreciation and impairment of property, plant and equipment June 30, 2017 2016 ThCh$ ThCh$ Buildings (265,921,728) (250,330,002) Plant and equipment (388,944,915) (375,590,814) Information technology equipment (124,196,587) (116,154,417) Fixed installations and accessories (486,871,284) (447,496,180) Motor vehicles (4,395,192) (4,428,651) Leasehold improvements (103,461,188) (95,655,943) Other property plant and equipment (5,317,809) (5,299,426) Totals (1,379,108,703) (1,294,955,433)

Method used for the depreciation of property, plant and equipment (life) Rate explanation Minimum life Maximum life Buildings Useful Life (years) 25 60 Plant and equipment Useful Life (years) 7 20 Information technology equipment Useful Life (years) 3 7 Fixed installations and accessories Useful Life (years) 7 15 Motor vehicles Useful Life (years) 1 5 Leasehold improvements Useful Life (years) According to contract length Other property plant and equipment Useful Life (years) 3 15

The Group reviews the estimated useful lives of property, plant and equipment at the end of each annual period. The Company has determined that there are no significant changes in the estimated useful lives for the reported periods.

The following chart shows a detailed roll-forward of changes in property, plant and equipment, by class between January 1, 2017 and June 30, 2017:

Fixed Other Informationinstallations property, Property, Plant and technology and Motor Lease plant and plant and Movement for the six months Construction In Building, equipment equipment, accessories, vehicles, improvements,equipment, equipment, ended June 30, 2017 progress Land net net net net net net net net ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Opening balance January 1, 2017 66,402,237 659,605,782 1,048,864,332219,967,327 36,328,354 304,243,709 670,349 234,231,790 8,479,693 2,578,793,573 Changes Additions 28,144,985 1,128,940 5,573,652 16,948,228 4,199,340 9,038,750 78,257 9,964,776 1,239,577 76,316,505 Removal (9,923) - (200,511) (211,395) (4,989) (350,834) - (38,935) - (816,587) Depreciation expenses - - (16,432,817) (25,029,483) (8,549,144) (34,237,838) (128,690) (18,293,258) (18,383) (102,689,613) Increase (decrease) for revaluation charged to equity ------Increase (decrease) in foreign exchange (2,346,413) (2,207,670) 960,517 (931,129) (570,326) (2,192,063) (23,478) (5,135,634) 1,856,695 (10,589,501) Transfer to (from) non—current assets and disposal groups held for sale - (18,957,334) (1,010,720) ------(19,968,054) Other increase (decrease) (18,520,176) - 6,505,841 12,832,781 6,938,441 16,665,043 - (21,268,797) (3,153,133) - Total changes 7,268,473 (20,036,064) (4,604,038) 3,609,002 2,013,322 (11,076,942) (73,911) (34,771,848) (75,244) (57,747,250) Final balance as of June 30, 2017 73,670,710 639,569,718 1,044,260,294223,576,329 38,341,676 293,166,767 596,438 199,459,942 8,404,449 2,521,046,323

The following chart shows a detailed roll-forward of changes in property, plant and equipment, by class between January 1, 2016 and December 31, 2016:

Fixed Other Informationinstallations property, Property, Plant and technology and Motor Lease plant and plant and Movement for the year ended Construction In Building, equipment equipment, accessories, vehicles, improvements,equipment, equipment, December 31, 2016 progress Land net net net net net net net net ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Opening balance January 1, 2016 63,017,895 725,437,554 1,075,995,255246,716,665 32,046,485 343,696,782 577,489 202,460,078 21,542,427 2,711,490,630 Changes Additions 112,960,591 2,637,687 14,673,368 27,951,919 4,281,236 19,393,558 64,748 9,534,011 894,142 192,391,260 Decrease derived from loss of control in subsidiaries (26,452) - (294,862) (36,007) (34,940) - - - - (392,261) Transfers to (from) investment properties (6,299,632) (41,143,628) (1,890,902) (733,140) 224,296 (756,374) - - (3,306,574) (53,905,954) Retirements (227,085) (992,318) (5,922,284) (5,606,035) (567,568) (298,660) - (212,866) (2,259,506) (16,086,322) Depreciation expenses - - (31,219,656) (52,165,648) (14,005,719) (67,906,543) (221,744) (30,452,796) (632,791) (196,604,897) Increase (decrease) for revaluation - 18,435,465 ------18,435,465

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document charged to equity Impairment losses recognized in results - (2,639,637) ------(2,639,637) Decrease (increase) in foreign exchange (2,225,068) (14,638,273) (21,515,463) (718,868) (919,762) (2,617,885) (25,217) 14,468,605 (2,343,689) (30,535,620) Transfer to non—current assets and disposal groups held for sale - (27,520,057) (9,440,631) (537,066) (1,684) (445,337) - - (5,414,316) (43,359,091) Other increase (decrease) [1] (100,798,012) 28,989 28,479,507 5,095,507 15,306,010 13,178,168 275,073 38,434,758 - - Total changes 3,384,342 (65,831,772) (27,130,923) (26,749,338) 4,281,869 (39,453,073) 92,860 31,771,712 (13,062,734) (132,697,057) Final balance as of December 31, 2016 66,402,237 659,605,782 1,048,864,332219,967,327 36,328,354 304,243,709 670,349 234,231,790 8,479,693 2,578,793,573

[1] It corresponds to in-process assets that are being transferred to definitive assets. As a result of that, asset classes are offset. Il also includes reclassifications from lease improvements group to fixed installations and accessories, and plant and equipment groups.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 11.4 The Company has traditionally maintained the policy to carry out all the necessary work in response to the opportunities and changes experienced in domestic and regional markets where the Company operates, to capture the best opportunities and results for each of its business units.

The cost includes disbursements directly attributable to the acquisition or construction of an asset, as well as interests from related financing in the case of qualifying assets.

11.5 Borrowing costs:

The company incorporates borrowing costs that are directly attributable to the acquisition, construction or production of a qualified asset during the period to complete and prepare the asset for its intended use.

As of June 30, 2017, and December 31, 2016, there is no capitalization of borrowing costs.

11.6 Assets granted

As of June 30, 2017 and December 31, 2016, properties, plant and equipment granted as security amounted ThCh$ 4,092,234 and ThCh$ 3,867,501, respectively. Nevertheless, there are no restrictions on ownership of assets. Nevertheless, there are no restrictions on transfer of assets.

11.7 Commitments to acquire assets

As of June 30, 2017 and December 31, 2016, there are commitments to acquire property, plant and equipment of ThCh$ 98,244,569, and of ThCh$ 86,104,812, respectively.

11.8 Assets out of service

As of June 30, 2017 and December 31, 2016, there are no essential elements or assets that are temporarily out of service. The property, plant and equipment mainly relate to stores and operating fixed assets to enable the performance of the retail business every day of the year, except when there are restrictions for public holidays established in each country.

11.9 Assets fully depreciated

In view of the nature of the retail business, the Company has no significant assets that are fully depreciated and that are in use as of June 30, 2017 and December 31, 2016. These assets relate mainly to minor equipment such as scales, furniture, computers, cameras, lighting and others. The retail business assets are depreciated based on the term of the lease agreement.

11.10 Impairment losses

Assets subject to amortization are tested for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be recovered. It recognizes an impairment loss when the carrying amount is greater than its recoverable amount. The recoverable amount of an asset is the higher of an asset’s fair value less costs to sell and its value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which identifiable cash flows exist separately. As discussed below, the Company has recognized an impairment loss, related to property, plant and equipment, in the amount of ThCH$ 2,639,637 for the period ended December 31, 2016. No impairment related to property, plant and equipment was recorded for the periods ended December 31, 2015 and 2014.

During 2016, the Company has initiated a detailed plan for a non-strategic sale of assets in Chile. These assets were previously classified within the property, plant and equipment category.

International Financial Reporting Standard IFRS 5 "Assets Held for Sale" indicates that the assets of a company must be classified according to the use or destination that the company decides to give them. Accordingly, these assets must be reclassified as a consequence of a change of plans by management, since the intention of the company is to realize the sale of such assets within a period not exceeding one year.

In order to comply with IFRS5, the market value obtained by management was compared with the book value of the assets included in the sales plan. From this comparison, it was verified that in eight of the locations in the process of commercialization, the book value exceeds its recoverable value amounted to ThCh $ 2,639,637, proceeding to record the impairment prior to reclassification to assets held for sale.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Assets held for sale at December 31, 2016 amounts to carrying value of ThCh $ 10,883,992, recoverable amount of ThCh $ 8,244,355 and related impairment of ThCh $ 2,639,637.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Management has determined the fair value of each asset held for sale, based on market information. The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available management consider information from a variety of source including current prices in an active market for properties of different nature or recent prices of similar properties in less active markets, adjusted to reflect those differences. The key input under this approach is the price per square meter from recent sales. These values were determined using level II inputs in accordance with the definitions of IFRS 13.

11.11 Property Plant and Equipment components:

The main items that compose each asset class are: Plant and equipment: presented in this asset class are primarily properties used in the operation of retail business such as mixers, sausages portioning machines, system ready meals, frozen island, cold containers, and refrigerated display cases, forming bread ovens, blender, among others.

Equipment for information technology: correspond to items such as computers, printers, notebook, labeling, scanner, clock control, price inquiries and servers, among others.

Fixed installations and accessories: presented in this asset class are expenditures to enable operations of stores, such, ceilings, floors, wall finishes, lighting the sky, smoke detectors, sprinklers, air ducts and heating, communications networks , escalators, elevators, hoists, electrical substation and central air conditioning among others.

Leasehold improvements: presented in this asset class are disbursements associated with enabling or leased store improvements such as remodeling of facades, finishes, floors, ceilings and walls among others. Other property, plant and equipment: mainly corresponds to fixed assets in transit and assets acquired under finance lease.

11.12 Property Plant and Equipment valuation

During 2016, several pieces of land, included within the Property, plant and equipment item amounting a historical cost of ThCh $ 16,636,913 were revalued. Such revaluation was made as required by IAS 40 prior to the transfer of such assets from property, plant and equipment to investment property. In order to determine the amount of the revaluation, the fair value of the mentioned land pieces was determined by management, with experience in the localities and category of the appraised properties.

The revaluation implied a net increase in the value of land group amounted to ThCh $ 18,435,465. A net of tax amount of $ 14,253,013 was credited to equity through other comprehensive income in 2016.

As of June 30, 2017 Cencosud maintains a total of 1,169 (1,171 as of December 31, 2016) stores located in Chile, Argentina, Peru, Brazil and Colombia. A total of 461 (444 as of December 31, 2016) of those locations are stores operated on their own land, classified under the item "Properties, plants and equipment".

As of December 31, 2016, of a sample of 103 own land locations were tested to compare their book values against their market values, in order to know the reasonableness of the book values measured by the accounting policy under the cost method. In this comparison, it was verified that the market value, in an average, is 45% higher than the book value of such assets, with the exception of Argentina, where this percentage is significantly increased by the effects of local inflation presented during recent years.

The methodology used in determining the market value assumes that the values assigned are representative of the most likely transaction values that an independent buyer is willing to pay at the valuation date.

11.13 Property Plant and Equipment components:

Equipment for information technology: correspond to items such as computers, printers, notebook, labeling, scanner, clock control, price inquiries and servers, among others.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Fixtures and fittings: presented in this asset class are expenditures to enable operations of stores, such, ceilings, floors, wall finishes, lighting the sky, smoke detectors, sprinklers, air ducts and heating, communications networks , escalators, elevators, hoists, electrical substation and central air conditioning among others.

12.1 The roll-forward of investment properties as of June 30, 2017 and December 31, 2016 is the following:

As of December 31, Roll-forward of investment properties, net, fair value method June 30, 2017 2016 ThCh$ ThCh$ Investment properties, net, initial value 2,081,694,027 1,807,095,204 Effect of fair value in profit or loss 71,878,591 287,519,826 Additions 3,314,808 1,225,878 Transfer from owner-occupied property, investment property, cost model - 53,905,954 Transfer to assets classified as “held for sale” - (2,939,242) Retirements, Fair Value Method (3,563,885) (3,579,094) Increase (decrease) in foreign exchange rate (13,446,963) (61,534,499) Changes in Investment Properties, Total 58,182,551 274,598,823 Investment Properties Final Balance 2,139,876,578 2,081,694,027

12.2 Income and expense from investment properties

For the six months ended June 30, June 30, Roll-forward of investment properties, net fair value method 2017 2016 ThCh$ ThCh$ Revenue from Investment Property Leases 121,359,185 111,824,133 Direct operating expenses of Investment Properties which generate lease revenue 25,479,833 25,015,628

12.3 As of June 30, 2017 and December 31, 2016, investment properties are not encumbered,

12.4 As of June 30, 2017 there are commitments to acquire investment properties by ThCh$ 4,139,596 (ThCh$ 4,331,676 as of December 31, 2016),

12.5 There are no restrictions on ownership of assets,

12.6 Investment Properties

As of June 30, 2017 and December 31, 2016, these assets are valued using the fair value model. The methodology used in the valuation of these assets and significant assumptions used are described in note 4.1. The Costanera Center project corresponds to assets that have been classified as investment property. The shopping mall is in operation since June, 2012. First 15,000 square meters of towers 2 and 4 were allowed to be leased as commercial offices by the municipality authority from August 2015.

The composition of this item as of June 30, 2017 and December 31, 2016 is the following:

13.1 Types of interest bearing (accruing) loans

Balance as of 6/30/2017 Balance as of 12/31/2016 Loans Current Non-current Current Non-current ThCh$ ThCh$ ThCh$ ThCh$ Bank loans (1) 291,207,217 191,657,809 215,393,417 206,299,337 Bond debt (2) 249,241,058 2,506,434,669 127,530,284 2,618,875,407 Other loans—leases 2,495,366 17,699,326 2,713,893 19,256,643 Other financial liabilities (forward) 4,204 - - - Other financial liabilities (hedge derivatives) (3) 2,043,429 9,827,770 4,151,393 12,441,477 Time deposits (4) 58,147,316 36,020,842 56,113,724 45,030,033 Deposits and other demand deposits 9,253 - 15,224 - Debt purchase Bretas - 1,846,979 - 1,722,769 Other Financial liabilities—other 2,482,889 - 2,091,081 - Totals Loans 605,630,732 2,763,487,395 408,009,016 2,903,625,666

(1) Bank loans correspond to loans taken out with banks and financial institutions, (2) Bond debt corresponds to bonds placed in public securities markets or issued to the public in general, (3) Other financial liabilities (hedge derivatives) includes cross currency swaps, interest rate swaps and forward contracts. (4) Time deposits are the main funding source of the subsidiary Banco Cencosud Peru.

The movement of other financial liabilities current, and non-current for the six months ended June 30, 2017 is the following:

Payments includes Currency Balance as capital translation Balance as Movement of other financial liabilities, of Accrued and and of current and non-current 1/1/2017 Additions interests interests indexation Other 6/30/2017 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Bank loans (421,692,754) (108,688,733) (33,116,415) 74,567,394 1,351,964 4,713,518 (482,865,026) Bond debt (2,746,405,691) (7,775,082) (72,982,005) 80,176,839 8,233,415 (16,923,203) (2,755,675,727) Other loans—leases (21,970,536) - (442,924) 949,744 - 1,269,024 (20,194,692) Other financial liabilities (forward) - - - - - (4,204) (4,204) Other financial liabilities (hedge activities) (16,592,870) - 540,042 2,402,769 (976,691) 2,755,551 (11,871,199) Time deposits (101,143,757) - (2,904,345) 12,265,577 - (2,385,633) (94,168,158) Deposits and other demand deposits (15,224) - - 5,971 - - (9,253) Debt purchase Bretas (1,722,769) - (165,057) - - 40,847 (1,846,979) Other Financial liabilities—other (2,091,081) - (342,487) - - (49,321) (2,482,889) Total other financial liabilities, current and non-current (3,311,634,682) (116,463,815) (109,413,191) 170,368,294 8,608,688 (10,583,421) (3,369,118,127) Other financial assets (hedging derivatives) 287,119,800 - (2,160,167) (3,219,453) (9,791,326) (107,146) 271,841,708 Total other financial assets, current and non- current (hedging derivatives) 287,119,800 - (2,160,167) (3,219,453) (9,791,326) (107,146) 271,841,708

13.2 Restrictions

Loan agreements and outstanding bonds of the Company contain a number of covenants requiring compliance with certain financial ratios and other tests, As of June 30, 2017 and December 31, 2016 the Company was in compliance with all financial debt covenants subscribed.

14.1 Provisions

The composition of this item as of June 30, 2017 and December 31, 2016 is as follows:

As of June 30, December 31, June 30, December 31, Accruals and provision 2017 2016 2017 2016 Current Non-current ThCh$ ThCh$ ThCh$ ThCh$ Legal claims provision (1) 11,064,303 10,340,136 57,174,041 58,005,001 Onerous contracts provision (2) 1,433,366 1,439,298 9,553,562 10,251,159 Total 12,497,669 11,779,434 66,727,603 68,256,160

(1) The nature of these obligations is as follows:

Civil provision: This primarily corresponds to civil and commercial trials that mainly deal with claims from customers, defects in products, accidents of customers in the stores and law suits related with customer service.

Labor provision: This primarily corresponds to staff severance indemnities and salary disputes from former employees.

Tax provision: This primarily corresponds to tax claims in the countries in which the Company operates.

The following table shows the civil, labor and tax proceedings faced by the Company and its subsidiaries (by country). The proceedings comprising each category are those that present probable occurrence likelihood and the amount of loss can be quantified or estimated.

Provision Legal Claims (2) Exposure Non- Civil Labor Tax Total Current current ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Total as of June 30,2017 28,669,030 18,606,090 20,963,224 68,238,344 11,064,303 57,174,041 Total as of December 31,2016 28,708,673 21,405,740 18,230,724 68,345,137 10,340,136 58,005,001

December 31, June 30, 2017 2016 Provision By Country ThCh$ ThCh$ Chile 16,413,301 15,351,464 Argentina 17,267,349 19,260,544 Brazil 29,713,169 29,078,658 Peru 634,516 673,291 Colombia 4,210,009 3,981,180 Total Provision 68,238,344 68,345,137

(2) Provisions for onerous contracts

The provisions recorded under this concept correspond mainly to the excess over the fair value payable related to onerous lease contracts recorded in business combinations of the previous periods.

Onerous Provision type Legal claims contracts Total ThCh$ ThCh$ ThCh$ Initial Balance January 1, 2017 68,345,137 11,690,457 80,035,594 Movements in Provisions: Creation of additional provisions 4,318,409 - 4,318,409 Increase (decrease) in existing provisions 1,670,000 (703,529) 966,471 Application of provision (2,547,481) - (2,547,481) Reversal of non-used provisions (1,817,275) - (1,817,275) Increase (decrease) in foreign exchange rate (1,730,446) - (1,730,446) Changes in provisions, total (106,793) (703,529) (810,322) Total provision, closing balance as of June 30, 2017 68,238,344 10,986,928 79,225,272

Onerous Provision type Legal claims contracts Total ThCh$ ThCh$ ThCh$ Initial Balance January 1, 2016 77,816,222 16,014,325 93,830,547 Movements in Provisions: Creation of additional provisions 8,075,575 - 8,075,575 Increase and decrease in existing provisions 578,142 (4,323,868) (3,745,726) Application of provision (12,127,645) - (12,127,645) Reversal of unused provision (2,504,731) - (2,504,731) Increase (decrease) in foreign exchange rate (3,492,426) - (3,492,426) Changes in provisions, total (9,471,085) (4,323,868) (13,794,953) Total provision, closing balance as of December 31, 2016 68,345,137 11,690,457 80,035,594

The objectives of the Cencosud Group regarding capital management are to safeguard its capacity to continue as a going concern, ensuring appropriate returns for its shareholders and benefits for other stakeholders, and maintaining an optimum capital structure while reducing capital costs.

Capital management

The Group’s objective regarding capital management is to safeguard the capacity to continue ensuring appropriate returns for the shareholders and benefits for other stakeholders, and maintaining an optimum capital structure while reducing capital costs.

In line with the industry, we monitor our capital using a leverage ratio calculation. This ratio is calculated by dividing net financial debt by total equity. We define net financial debt as total financial liabilities (a) less (i) total cash and cash equivalents, (ii) total other financial assets, current and non-current, and (iii) other financial liabilities, current and non-current, from Banco Paris and Banco Peru, (b) plus (i) cash and cash equivalents from Banco Paris and Banco Peru and (ii) total other financial assets, current and non-current, from Banco Paris and Banco Peru. Total financial liabilities is defined as Other financial liabilities, current, plus Other financial liabilities, non-current.

In accordance with the above, we combine different financing sources, such as: capital increases, operating cash flows, bank loans and bonds.

15.1 Paid-in capital

As of June 22, 2012, the Company proceeded to increase the authorized Capital through the issuance of 270,000,000 of shares, without a par value and in a unique series, as agreed at the shareholders meeting held on April 29, 2011 which complemented and modified preliminary agreements made at extraordinary shareholders meetings on March 1, 2012 and May 15, 2012. 27,000,000 shares out of the capital increase were set aside to offer them in a stock option plan for the Company’s upper management.

The referential share price reported to the SVS (Superintendencia de Valores y Seguros) was ThCh$ 3,555.56. The final issue share price was ThCh$2,600 per share.

In connection with share issuance, 59,493,000 shares were issued in the United States of America in the form of American Depositary Shares (ADSs) and the remaining 210,507,000 shares were issued in the local market in Chile.

At the extraordinary shareholders meeting held on November 20, 2012, the shareholders agreed to increase capital by ThCh$835,000,000 through the issuance of 332,987,717 of shares in one series and without a par value. 10% of the total issuance was set aside to offer them in a stock option plan for employees, the remaining of the shares was offered to the Company’s shareholders.

On April 28, 2017, the Board of Directors has defined to apply for a voluntary delisting of its ADRs from the NYSE, in connection with the intention to terminate the ADR facility, and deregister with the Securities and Exchange Commission.

ADR holders will be entitled to surrender their ADRs to Bank of New York Mellon for cancellation, and upon payment of the applicable fees, taxes and charges as provided in the deposit agreement, receive the underlying shares of common stock of Cencosud. Cencosud will maintain its listings on the Santiago Stock Exchange, the Chile Electronic Stock Exchange, and the Valpara’so Stock Exchange.

The following table shows the movement of the fully paid shares described above between January 1, 2016 and June 30, 2017:

Shares Shares No of Issuances premium Movement of paid shares shares (Th$) (Th$) Paid shares as of January 1, 2016 2,828,723,963 2,321,380,936 526,633,344 Stock options issuance 2016 33,812,984 99,183,799 (65,331,247) Paid shares as of December 31, 2016 2,862,536,947 2,420,564,735 461,302,097 Paid shares as of January 1, 2017 2,862,536,947 2,420,564,735 461,302,097 Paid in capital under stock option plans 15,000 37,614 (12,924) Paid shares as of June 30, 2017 2,862,551,947 2,420,602,349 461,289,173

The following table shows the movement of the fully authorized shares between January 1, 2016 and June 30, 2017:

No of Movement of authorized shares Shares Authorized shares as of January 1, 2016 2,889,022,734 Expired shares as of April 29, 2016 (13,264,341) Authorized shares as of December 31, 2016 2,875,758,393 Authorized shares as of January 1, 2017 2,875,758,393 Authorized shares as of June 30, 2017 2,875,758,393

As of June 30, 2017 and December 31, 2016, 13,206,446 issued shares were pending of subscription and payment, of which expiration will be on November 20, 2017.

15.3 Dividends

The dividend distribution policy adopted by Cencosud S,A., establishes the payment of dividends of 30% of the distributable net profits.

In relation to SVS Ruling No. 1945, on October 29, 2010, the Company’s Board of Directors agreed that the net distributable profits for the year 2010 and following years will be the figure reflected in the financial statements as “profit for the year attributable controlling shareholders”, excluding the unrealized result for fair value appraisal of investment properties, net of deferred taxes.

On April 29, 2016, the Ordinary Shareholders Meeting agreed on distributing a definitive dividend in relation to the profits of 2015 amounted to Ch$ 73,684,179,628, which represents about to 80.55% of the distributable profit. This also represents a dividend of Ch$ 25.92268 per share. The aforementioned distribution of profits shall be made by: (i) the distribution of an additional dividend in the amount of $ 10 per share; plus (ii) the distribution of an interim dividend of $ 16 per share already paid from December 4, 2015.

In addition, the Shareholders Meeting approved an extraordinary dividend in the amount of $ 50 per share, chargeable to retained earnings from previous years, reducing the reserve fund for future dividends amounted to Ch$ 142,122,981,100. The payment of the above dividend will be made from May 17, 2016.

On November 2, 2016, the Board of Directors agreed on distributing an interim dividend of Ch$20 per share in relation to the profits of 2016. This dividend was given to the shareholders order from December 7, 2016.

The Ordinary Shareholders Meeting held on April 28, 2017, defined a final dividend of $30 per share in relation to the 2016 net distributable profits. The payment of the mentioned dividend will be made from May 17, 2017.

The company recorded a minimum dividend by Th$Ch$ 11,602,067 as of June 30, 2017 (Th$Ch$ 357,939 as of December 31, 2016). The total charge to equity as of June 30, 2017 amounted to ThCh$ 97,120,685, (ThCh$ 227,755,932 as of December 31, 2016).

15.4 Reserves

Reserves are described as follows:

a) Revaluation surplus: It corresponds to revaluation of property, plant and equipment items transferred to investment properties during the year as a result of a change in their usage. b) Currency translation reserve: This item includes the exchange rate differences resulted from the conversion of the financial statement of all subsidiaries from their functional currency into the presentation currency of the Group. c) Hedging reserves: This reserve includes the effect of the changes in the fair value of certain financial instruments used as cash flow hedges and deemed as effective. These reserves are transferred to income of the period at the end of the life of the instruments’ contracts when the hedged cash flow is realized. d) Actuarial gain (loss) reserve: This reserve is composed of the actuarial gains (losses) and the effect from the return on the pension plan asset that have been recognized over the past two year in relation to the Company’s pension plan Brazil.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document e) Shared based payments reserves: This reserve is originated from the share-based compensation options plan for executives of Cencosud S.A. and subsidiaries maintained by the company. f) Other reserves: The initial balance shows the effect of the elimination of price-level restatement of book-basis capital under IFRS for the transition year. As of June 30, 2017 and 2016 no significant changes were observed.

Movements of reserves between January 1, 2017 and June 30, 2017 are as follows:

Shared Actuarial based Revaluation Hedging gain (loss) payments Other Total Reserve movement surplus Translation reserves reserves reserves reserves reserves Initial balance current period January 1, 2017 14,252,148 (1,250,381,663) (22,078,872) (1,120,048) 26,949,962 (53,638,633) (1,286,017,106) Change in equity Increase (decrease) in reserves - (66,269,978) (9,203,996) - - - (75,473,974) Deferred taxes - - 2,391,241 - - - 2,391,241 Reclassification to profit or loss of reserves - - 6,255,870 - - - 6,255,870 Reclassification of deferred taxes related to reserves - - (1,595,247) - - - (1,595,247) Other comprehensive (loss) profit - (66,269,978) (2,152,132) - - - (68,422,110) Transfer from retained earnings - - - - 1,767,330 - 1,767,330 Decrease) from changes in ownership interest in subsidiaries that do not result in loss of control - - - - - 11 11 Non-controlling interest ------Total changes in equity - (66,269,978) (2,152,132) - 1,767,330 11 (66,654,769) Closing balance as of June 30, 2017 14,252,148 (1,316,651,641) (24,231,004) (1,120,048) 28,717,292 (53,638,622) (1,352,671,875)

Movements of reserves between January 1, 2016 and June 30, 2016 are as follows:

Shared Actuarial based Revaluation Hedging gain (loss) payments Other Total Reserve movement surplus Translation reserves reserves reserves reserves reserves Initial balance current period January 1, 2016 - (1,187,109,821) 14,859,584 (229,427) 19,276,599 (52,476,934) (1,205,679,999) Change in equity Increase (decrease) in reserves - 14,524,598 (2,107,464) - - - 12,417,134 Deferred taxes - - 221,115 - - - 221,115 Reclassification to profit or loss of reserves - - 11,909,844 - - - 11,909,844 Reclassification of deferred taxes related to reserves - - (2,858,362) - - - (2,858,362) Other comprehensive (loss) profit - 14,524,598 7,165,133 - - - 21,689,731 Transfer from retained earnings - - - - 5,059,660 - 5,059,660 Decrease) from changes in ownership interest in subsidiaries that do not result in loss of control - - - - - (1,161,699) (1,161,699) Non-controlling interest ------Total changes in equity - 14,524,598 7,165,133 - 5,059,660 (1,161,699) 25,587,692 Closing balance as of June 30, 2016 - (1,172,585,223) 22,024,717 (229,427) 24,336,259 (53,638,633) (1,180,092,307)

Details of the non-controlling interest as of June 30, 2017 and December 31, 2016 are as follows:

Equity:

Non- Non- controlling controlling Interest Interest Balances Jun 30, Dec 31, as of, 2017 2016 Jun 30, 2017 Dec 31, 2016 Company % % ThCh$ ThCh$ Cencosud Shoppings Centers S.A. 0.00004 0.00004 504 479 Mercado Mayorista P y P Ltda. 10.00000 10.00000 93,871 93,871 Easy Retail S.A. 0.07361 0.07361 15,206 18,795 Comercial Food and Fantasy Ltda. 10.00000 10.00000 (10,591) - Administradora del Centro Comercial Alto Las Condes Ltda. 55.00000 55.00000 81,584 (1,608,229) Cencosud Retail S.A. 0.03900 0.03900 219,456 231,864 Jumbo Retail Argentina S.A. 0.07600 0.07600 46,242 54,816 Total 446,272 (1,208,404)

Results:

Non- Non- controlling controlling Interest Interest Results for the six months Jun 30, Jun 30, ended June 30, 2017 2016 2017 2016 Company % % ThCh$ ThCh$ Cencosud Shoppings Centers S.A. 0.00004 0.00004 25 30 Easy Retail S.A. 0.07361 0.07361 (3,590) 463 Comercial Food and Fantasy Ltda. 10.00000 10.00000 13,410 - Administradora del Centro Comercial Alto Las Condes Ltda. 55.00000 55.00000 1,689,813 1,340,606 Cencosud Retail S.A. 0.03900 0.03906 16,622 20,005 Jumbo Retail Argentina S.A. 0.07600 0.07600 (6,092) 674 Total 1,710,188 1,361,778

The items by function from the Statements of Income are described as follows in 16,1, 16,2 y 16,3,

6-30-2017 6-30-2016 ThCh$ ThCh$ Cost of sales 3,643,747,192 3,540,716,396 Distribution cost 13,534,175 12,635,011 Administrative expenses 1,188,651,547 1,131,135,634 Other expenses by function 84,606,065 80,199,820 Total 4,930,538,979 4,764,686,861

16.1 Expenses by nature

The following is a breakdown of the main operating and management costs and expenses of the Cencosud Group for the following periods:

For the six months ended June Expenses by nature 30 2017 2016 ThCh$ ThCh$ Cost of goods sold 3,372,529,717 3,303,681,799 Other cost of sales 271,217,475 237,034,597 Personnel expenses 737,061,782 686,983,576 Depreciation and amortization 118,896,312 105,318,572 Distribution cost 13,534,175 12,635,011 Other expenses by function 84,606,065 80,199,820 Cleaning 37,436,385 36,175,730 Safety and security 31,960,719 29,814,601 Maintenance 40,712,856 40,451,121 Professional fees 36,995,743 36,397,655 Bags for Customers 8,041,649 9,857,408 Credit card commission 49,776,723 48,798,498 Lease 98,996,663 94,481,171 Other 28,772,715 42,857,302 Total 4,930,538,979 4,764,686,861

16.2 Personnel expenses

The following is a breakdown of personnel expenses for the following periods:

For the six months ended June Personnel expenses 30 2017 2016 ThCh$ ThCh$ Salaries 585,257,536 550,634,550 Short-term employee benefits 130,312,790 120,289,160 Termination benefits 21,491,456 16,059,866 Total 737,061,782 686,983,576

The following is a breakdown of depreciation and amortization for the following periods:

For the six months ended June Depreciation and amortization 30 2017 2016 ThCh$ ThCh$ Depreciation 102,689,613 92,229,608 Amortization 16,206,699 13,088,964 Total 118,896,312 105,318,572

16.4 Other gains (losses)

For the six months ended June Other gain (losses) 30 2017 2016 ThCh$ ThCh$ Gain in the sale of subsidiary and associates - 53,484,358 Complementary remittance tax (2,263,895) (2,274,218) Wealth tax Colombia (2,222,000) (5,566,905) Long lived assets impairment - (3,053,000) Insurance claims gains (losses) (1,938,551) 2,966,100 Sales of businesses and properties 7,825,748 11,368,556 Other net losses 899,135 (5,210,479) Total 2,300,437 51,714,412

16.5 Other operating income

For the six months ended June Other operating income 30 2017 2016 ThCh$ ThCh$ Sell Carton and Wraps 1,573,698 2,039,947 Recovery of fees 788,023 1,045,289 Increase on revaluation of Investment properties (see note 12.1) 71,878,591 84,095,984 Other Income 4,451,977 3,516,066 Total 78,692,289 90,697,286

The following is the financial income detailed for the periods ended:

For the six months ended June Financial results 30 2017 2016 ThCh$ ThCh$ Other finance income from investments 7,762,687 6,876,691

Financial Income 7,762,687 6,876,691

Bank loan expenses (51,960,366) (56,550,277) Bond debt expenses (69,762,552) (69,774,856) Interest on bank deposits - (680,806) Valuation of financial derivatives (7,201,464) (2,967,458)

Financial Expenses (128,924,382) (129,973,397)

Results from UF indexed bonds in Chile (7,308,942) (7,682,096) Results from UF indexed Brazil (257,683) (569,089) Results from UF indexed Other 366,035 -

(Losses) gains from indexation (7,200,590) (8,251,185)

Financial debt IFC-ABN Argentina 277,132 (609,777) Debt to the public Bonds and Banks (Chile) 30,818,454 45,369,286 Financial debt Peru (80,570) (309,642) Financials Assets and Debts (Colombia) 256,529 163,766

Exchange difference 31,271,545 44,613,633

Financial results total (97,090,740) (86,734,258)

The charge (credit) to periodic results within the Interim consolidated statement of profit and loss by function related to the income tax amounts were M$ 78,780,003 as of June 30, 2017; and M$ 88,871,238, as of June 30, 2016, as the table below:

June 30, 2017 June 30, 2016 Current and deferred income tax ThCh$ ThCh$ Net current income tax expense 72,773,561 90,094,219 Income tax expense 72,773,561 90,094,219 Deferred tax expense (income) due to taxes arising from the creation and reversal of temporary differences 6,430,404 (2,196,396) Deferred expenses (income) due to taxes arising from the changes in tax rates or new rates (423,962) 973,415 Deferred income tax expense 6,006,442 (1,222,981) Net tax expense (income) 78,780,003 88,871,238

The following chart shows the reconciliation between the corporate income tax calculations resulting from the application of the legal and effective rates for the periods:

For the six months ended, June 30 Reconciliation of income tax expense using the statutory rate to income taxexpense using the effective rate 2017 2016 ThCh$ ThCh$ Income tax expense using the legal rate 43,580,275 68,630,153 Tax effect of rates in other territories 271,690 11,793,623 Tax effect on non-deductible expenses 5,876,489 7,027,739 Chile - Taxable effects from investment and equity (386,585) (1,649,837) Colombia - Wealth tax (non-deductible) 933,592 2,226,844 Chile – Taxable fair value adjustments related to derivatives and stock options 665,647 2,042,953 Chile –not recognized provisional payment on absorbed profits (PPUA) - (6,192,522) Chile – Mall Viña sale - 11,093,933 Colombia - Reversal of tax credits (presumptive system) [ii] 3,657,249 - Colombia - Goodwill write off (Mercadefam 2014) 205,930 205,930 Colombia –Presumptive Income rate adjustment 9% (rate 34% and credit 25%) 432,511 (3,775,283) Tax effect of changes in tax rates 423,962 (973,415) Nontaxable profits from investments accounted for using the equity method. (2,036,414) (1,640,828) Brazil – Tax losses valuation [i] 22,906,649 - Other (decrease) increase for legal tax 2,249,008 81,948

Adjustments to tax expenses using the legal rate, total…. 35,199,728 20,241,085

Income tax expense using the effective rate 78,780,003 88,871,238

Main components of effective tax rate reconciliation include: i. Brazil ceased the recognition of deferred tax asset over carry forward losses. ii. Colombia has reverted tax credits recognized during the first quarter 2017 related to excesses of the alternative presumptive system over the ordinary system. Colombian society has also suspended recognition during second quarter 2017 of those mentioned credits, which expire during 2017 financial year.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document a) Tax losses: The Company has deferred assets for tax losses arising from the different countries where it has investments. These arise mainly in the retail and real estate areas, both in Chile and abroad. There is no temporal limit for the usage of carry losses in Chile. Law 1,819 issued on December 2016 in Colombia, limits losses carry forward up to a maximum of 12 years, however, former losses are not limited to an specific period. Realization of tax losses is estimated based on the Group future projections. For the tax losses carry-forward obtained before January 1, 2017, there are no limits regarding their usage. b) Reversal of asset and liability timing differences: The reversal of asset and liability timing differences is directly related to the nature of the asset and liability accounts generating these differences. There is no set term for the reversal of timing differences, due to the reversal of some and the origin of others. c) Rate of income tax.

Chile The current income tax rate in Chile that affects the Company is 25.5% (Dec 2016: 24%). Under the 2014 enacted tax law, the income tax rate will increase to 21%, 22.5%, 24%, 25.5% and 27%, for the years 2014, 2015, 2016, 2017, 2018 and following fiscal years, respectively, based on the adoption of the partially integrated system.

According to regulations applicable to open listed societies, the income tax system applicable by Cencosud is the partially integrated system.

Any other later effects have been recognized within the income statement.

Foreign subsidiaries

The rates that affect its foreign subsidiaries are: 35% in Argentina

Peru 29.5%. Peru enacted in law Nº 30.296 which pretended to envisage gradual reduction in taxes from 30% to 28% in 2015-2016, 27% in 2017-2018, and 26% from 2019 onwards. However, the mentioned reduction will not have any effect; being that Legislative Decree No. 1261 published on December 10, 2016 contemplates a rate of 29.5% effective from the 2016 financial year.

Colombia 40%. Law 1,819 issued on December 2016 eliminated the income tax for equity “CREE” tax [1] (lately 6%), but simultaneously created a complementary income tax rate (6% 2017; 4% 2018), defining a total 40% rate being that nominal income tax rate was already 34%. Law 1,819 also eliminated wealth tax [2], defining a unique income tax rated to 33% since 2019. Income tax rate will be 37% for 2018 financial year, split on a basis rate of 33%, and an over rate of 4%.

Brazil remains with a 34% income tax rate.

[1] The CREE used to be a Colombian National tax which applies over profits and gains obtained by companies which are likely to enrich them. This tax replaced certain wage-based social contributions. [2] Wealth tax in Colombia was designed for all individuals and legal entities who are deemed income taxpayers. This tax might be calculated based on their tax net equity (gross assets minus debts), with an scalable rate from 0.05% to 0.40% in 2017.

The Company reports the information by segment according to what is set forth in IFRS 8 “Operating Segments,” An operating segment is defined as a component of an entity over which separated financial information is available and is regularly reviewed.

In the information by segments, all transactions between the different operating segments have been eliminated.

18.1 Segmentation criteria

For management purposes, the Company is organized in five operative divisions: Supermarkets, Shopping Centers, Home Improvement stores, Department stores and Financial Services. These segments are the basic on which the Company makes decisions with respect to its operations and resource allocation.

The operative segments are disclosed in a similar way with the presentation of the internal reports used by Management in the control and decision making process, considering the segments from a point of view according to the type of business and geographical area.

The operating segments that are reported derive their revenues mainly from the sale of products and rendering of services to final consumers of retail. There are no customers whose purchases represent more than 10% of the consolidated revenue, nor a specific business segment.

The rest of the minor activities, mainly including the travel agency and family-entertainment centers businesses, plus certain consolidation adjustments and corporate expenses administered centrally, are included in the segment “Support services, financing, adjustments and other”.

The segment information which is delivered to the chief operating decision maker (“Board of Directors”) of the reportable segments for the six months ended June 30, 2017 and June 30, 2016 in thousands of Chilean pesos is the following:

Regional information by segment

Supportservices, financing, Consolidated statement of Shopping Home Department Financial adjustments Consolidated income Supermarkets Centers improvement stores services and other total For the six months ended June 30, 2017 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Revenues from ordinary activities 3,677,980,291 121,359,185 649,449,730 545,438,361 108,787,942 6,585,188 5,109,600,697 Cost of sales (2,749,284,039) (13,989,453) (443,268,212) (390,411,941) (44,192,168) (2,601,379) (3,643,747,192) Gross Margin 928,696,252 107,369,732 206,181,518 155,026,420 64,595,774 3,983,809 1,465,853,505

Other revenues by function 5,367,938 72,079,960 559,252 358,481 1,280 325,378 78,692,289 Sales, general and administrative expenses (840,604,385) (11,490,380) (165,745,903) (143,732,388) (23,889,309) (101,329,422) (1,286,791,787) Financial expenses, net - - - - - (121,161,695) (121,161,695) Participation in profit of equity method associates (51,309) - - - 7,990,645 - 7,939,336 Exchange differences - - - - - 31,271,545 31,271,545 Losses from indexation - - - - - (7,200,590) (7,200,590) Other losses, net (277,289) - (1,635,602) - - 4,213,328 2,300,437 Income tax expense - - - - - (78,780,003) (78,780,003) Net profit (loss) 93,131,207 167,959,312 39,359,265 11,652,513 48,698,390 (268,677,650) 92,123,037 Net profit (loss) from continued operations 93,131,207 167,959,312 39,359,265 11,652,513 48,698,390 (268,677,650) 92,123,037 Net profit (loss) from discontinued operations ------Net profit (loss) of attributable to non- controlling interest - - - - - (1,710,188) (1,710,188) Net profit for the year attributable to controlling shareholders, Total 93,131,207 167,959,312 39,359,265 11,652,513 48,698,390 (270,387,838) 90,412,849 Depreciation and amortization 79,286,312 3,036,251 11,925,866 15,236,009 892,004 8,519,870 118,896,312

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Support services, financing, Consolidated statement of Shopping Home Department Financial adjustments Consolidated income Supermarkets Centers improvement stores services and other total For the six months ended June 30, 2016 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Revenues from ordinary activities 3,642,399,472 111,824,133 628,802,497 515,952,805 82,880,085 6,145,379 4,988,004,371 Cost of sales (2,708,844,463) (13,553,959) (413,604,314) (373,932,179) (28,151,112) (2,630,369) (3,540,716,396) Gross Margin 933,555,009 98,270,174 215,198,183 142,020,626 54,728,973 3,515,010 1,447,287,975

Other income by function 5,409,563 83,997,905 289,256 415,383 1,610 583,569 90,697,286 Sales, general and administrative expenses (790,914,172) (11,461,669) (156,943,171) (138,407,759) (25,994,170) (100,249,524) (1,223,970,465) Financial expenses, net - - - - - (123,096,706) (123,096,706) Participation in profit of equity method associates 127,143 - - - 5,144,753 - 5,271,896 Exchange differences - - - - - 44,613,633 44,613,633 Losses from indexation - - - - - (8,251,185) (8,251,185) Other gains (losses), net 1,607,520 1,358,580 - - - 48,748,312 51,714,412 Income tax expense - - - - - (88,871,238) (88,871,238) Net profit (loss) 149,785,063 172,164,990 58,544,268 4,028,250 33,881,166 (223,008,129) 195,395,608 Net profit (loss) from continued operations 149,785,063 172,164,990 58,544,268 4,028,250 33,881,166 (223,008,129) 195,395,608 Net profit (loss) from discontinued operations ------Net profit (loss) of attributable to non- controlling interest - - - - - (1,361,778) (1,361,778) Net profit for the year attributable to controlling shareholders, Total 149,785,063 172,164,990 58,544,268 4,028,250 33,881,166 (224,369,907) 194,033,830 Depreciation and amortization 65,968,013 2,998,905 11,994,366 14,747,376 1,598,628 8,011,284 105,318,572

The Company controls the results of each of the operating segments, at the level of revenues, costs and management expenses. The support services, exchange rates, readjustments, taxes and non-recurring income and expense, or financial income, are not allocated, as they are centrally managed.

The financing policy of the Group has been historically getting financed and managing these resources through the Company Holding Cencosud S,A., the funds are subsequently transferred to other countries as required to finance the local investments. This policy aims to reduce the financial cost of the Group.

Gross margin by country and segment

Support services, financing, For the six months Shopping Home Department Financial adjustments Consolidated ended June 30, 2017 Supermarkets centers improvement stores services and other total ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$

Chile Ordinary income, total 1,292,400,669 72,418,834 258,972,305 511,581,252 - 3,342,247 2,138,715,307 Cost of sales (961,191,510) (4,827,052) (192,729,770) (362,580,492) 19,272 (442,906) (1,521,752,458) Gross margin 331,209,159 67,591,782 66,242,535 149,000,760 19,272 2,899,341 616,962,849

Argentina Ordinary income, total 813,317,362 34,389,642 359,954,826 - 75,026,609 4,438,139 1,287,126,578 Cost of sales (547,184,573) (7,706,730) (227,226,278) - (29,687,664) (2,162,275) (813,967,520) Gross margin 266,132,789 26,682,912 132,728,548 - 45,338,945 2,275,864 473,159,058

Brazil Ordinary income, total 793,244,356 - - - 1,363,230 - 794,607,586 Cost of sales (634,264,677) - - - - - (634,264,677) Gross margin 158,979,679 - - - 1,363,230 - 160,342,909

Peru Ordinary income, total 401,958,870 9,994,590 - 33,857,109 29,274,897 549,885 475,635,351 Cost of sales (307,188,985) (1,331,982) - (27,831,449) (14,523,850) (7,544) (350,883,810) Gross margin 94,769,885 8,662,608 - 6,025,660 14,751,047 542,341 124,751,541

Colombia Ordinary income, total 377,059,034 4,556,119 30,522,599 - 3,123,206 (1,745,083) 413,515,875 Cost of sales (299,454,294) (123,689) (23,312,164) - 74 11,346 (322,878,727) Gross margin 77,604,740 4,432,430 7,210,435 - 3,123,280 (1,733,737) 90,637,148

Support services, financing, For the six months Shopping Home Department Financial adjustments Consolidated ended June 30, 2016 Supermarkets centers improvement stores services and other total ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$

Chile Ordinary income, total 1,263,803,367 64,447,101 259,792,522 485,033,894 708,870 4,234,642 2,078,020,396 Cost of sales (942,607,349) (4,884,981) (190,367,189) (349,032,896) 45,645 (370,265) (1,487,217,035) Gross margin 321,196,018 59,562,120 69,425,333 136,000,998 754,515 3,864,377 590,803,361

Argentina Ordinary income, total 806,898,146 33,336,929 337,983,020 - 49,607,610 2,701,958 1,230,527,663 Cost of sales (541,776,235) (7,157,411) (199,952,838) - (14,429,904) (1,480,954) (764,797,342) Gross margin 265,121,911 26,179,518 138,030,182 - 35,177,706 1,221,004 465,730,321

Brazil Ordinary income, total 763,509,155 - - - 1,716,196 - 765,225,351 Cost of sales (591,235,638) - - - - - (591,235,638) Gross margin 172,273,517 - - - 1,716,196 - 173,989,713

Peru Ordinary income, total 418,998,044 9,698,043 - 30,918,911 28,630,269 1,016,650 489,261,917 Cost of sales (321,952,147) (1,380,291) - (24,899,283) (13,766,876) (781,526) (362,780,123) Gross margin 97,045,897 8,317,752 - 6,019,628 14,863,393 235,124 126,481,794

Colombia Ordinary income, total 389,190,760 4,342,060 31,026,955 - 2,217,140 (1,807,871) 424,969,044 Cost of sales (311,273,094) (131,276) (23,284,287) - 23 2,376 (334,686,258) Gross margin 77,917,666 4,210,784 7,742,668 - 2,217,163 (1,805,495) 90,282,786

Support services, financing, Shopping Home Department Financial adjustments Consolidated Supermarkets centers improvement stores services and other total At June 30, 2017 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Current Assets Cash and cash equivalents 108,123,209 4,457,739 7,507,895 2,189,650 21,533 28,426,702 150,726,728 Other financial assets, current - - - - - 80,581,582 80,581,582 Other non-financial assets, current 15,377,022 1,921,593 2,871,060 1,686,085 18,678,263 2,683,845 43,217,868 Trade receivables and other receivables 214,245,383 23,801,200 49,352,757 28,253,268 455,434,912 20,983,385 792,070,905 Receivables due from related entities, current - - - - 14,378,482 - 14,378,482 Inventory 725,734,929 - 247,308,274 209,622,981 - - 1,182,666,184 Current tax assets 21,959,603 4,926,974 14,107,520 10,685,474 484,940 28,965,582 81,130,093 Assets classified as held for sale, current 23,894,518 8,954,832 - - - 31,228,005 64,077,355 Total current assets 1,109,334,664 44,062,338 321,147,506 252,437,458 488,998,130 192,869,101 2,408,849,197

Non-Current Assets Other financial assets, non-current - - - - - 272,092,635 272,092,635 Other non-financial assets, non-current 38,936,978 7,197,060 2,598,502 1,688,248 8,640 - 50,429,428 Trade receivables and other receivables, non-current 3,409,631 - 14,804,811 - - - 18,214,442 Equity method investments 620,034 - - - 202,884,485 - 203,504,519 Intangible assets other than goodwill 197,591,520 374,958 10,751,259 159,719,269 153,105 42,799,688 411,389,799 Goodwill 1,204,701,654 31,467,959 2,529,715 138,159,463 52,305,509 - 1,429,164,300 Property, plant and equipment 1,526,390,508 437,119,425 275,110,637 245,681,402 1,368,309 35,376,042 2,521,046,323 Investment property - 2,139,876,578 - - - - 2,139,876,578 Income tax assets, non- current 71,682,040 194,325 815,549 4,509,476 - 10,088 77,211,478 Deferred income tax assets - - - - - 623,002,505 623,002,505 Total non-current assets 3,043,332,365 2,616,230,305 306,610,473 549,757,858 256,720,048 973,280,958 7,745,932,007 Total Assets 4,152,667,029 2,660,292,643 627,757,979 802,195,316 745,718,178 1,166,150,059 10,154,781,204

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Support services, financing, Shopping Home Department Financial adjustment Consolidated Supermarkets centers improvement stores services sand other total At December 31, 2016 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Current Assets Cash and cash equivalents 181,727,680 4,377,803 13,760,047 2,246,159 1,008,517 72,098,797 275,219,003 Other financial assets, current - - - - - 219,988,622 219,988,622 Other non-financial assets, current 7,618,030 758,065 1,541,496 1,014,364 11,070,047 1,626,277 23,628,279 Trade receivables and other receivables 291,088,879 30,693,990 68,693,890 30,059,294 420,662,271 25,941,353 867,139,677 Receivables due from related entities, current 37,222 - - - 28,950,954 - 28,988,176 Inventory 700,985,806 - 254,992,540 193,307,668 - - 1,149,286,014 Current tax assets 16,633,102 2,090,444 3,647,748 13,803,843 3,722,153 34,238,357 74,135,647 Assets classified as held for sale, current 17,886,465 - - - - 39,237,407 57,123,872 Total current assets 1,215,977,184 37,920,302 342,635,721 240,431,328 465,413,942 393,130,813 2,695,509,290

Non-Current Assets Other financial assets, non-current - - - - - 287,360,674 287,360,674 Other non-financial assets, non-current 40,549,624 7,677,318 2,390,633 1,707,428 10,083 189 52,335,275 Trade receivables and other receivables, non-current 3,100,863 - 8,792,843 - - - 11,893,706 Equity method investments 989,721 - - - 199,737,813 - 200,727,534 Intangible assets other than goodwill 195,476,999 418,055 11,146,455 160,203,723 159,887 40,762,995 408,168,114 Goodwill 1,207,776,321 31,472,874 2,605,322 138,159,463 52,305,509 - 1,432,319,489 Property, plant and equipment 1,546,905,547 470,346,933 284,046,215 248,862,284 2,827,945 25,804,649 2,578,793,573 Investment property - 2,081,694,027 - - - - 2,081,694,027 Income tax assets, non- current 77,993,287 194,325 669,273 4,509,476 - 10,089 83,376,450 Deferred income tax assets - - - - - 616,579,356 616,579,356 Total non-current assets 3,072,792,362 2,591,803,532 309,650,741 553,442,374 255,041,237 970,517,952 7,753,248,198 Total Assets 4,288,769,546 2,629,723,834 652,286,462 793,873,702 720,455,179 1,363,648,765 10,448,757,488

Financial Support Services Services, Shopping Home Department (Insurance Financing, and Total Supermarkets Center Improvement Stores +cards + bank) Other Settings Consolidated Regional information by segment Current assets and liabilities at June 30, 2017 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Trade accounts payable and other payables 1,146,659,924 34,431,670 254,504,340 181,214,294 43,059,820 42,080,726 1,701,950,774

Financial Support Services Services, Shopping Home Department (Insurance Financing, and Total Supermarkets Center Improvement Stores +cards + bank) Other Settings Consolidated Regional information by segment Current assets and liabilities at December 31, 2016 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Trade accounts payable and other payables 1,294,692,757 35,089,329 273,630,631 246,827,811 39,764,889 36,841,635 1,926,847,052

18.6 Information by country, assets and liabilities

In thousands of Chilean pesos:

Assets and liabilities by country

Consolidated Chile Argentina Brazil Peru Colombia total At June 30, 2017 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Total assets 4,583,344,007 1,425,568,394 1,333,362,177 1,238,464,368 1,574,042,258 10,154,781,204 Total liabilities 4,052,570,495 778,650,171 523,502,185 368,815,381 418,874,476 6,142,412,708 Total Net equity 811,133,818 733,912,928 696,031,599 758,946,058 1,012,344,093 4,012,368,496 Adjustments to net investment (280,360,306) (86,994,705) 113,828,393 110,702,929 142,823,689 - Net investment 530,773,512 646,918,223 809,859,992 869,648,987 1,155,167,782 4,012,368,496 Percentage of Net equity 20.2% 18.3% 17.3% 18.9% 25.2% 100.0% Percentage of equity 13.2% 16.1% 20.2% 21.7% 28.8% 100.0%

Consolidated Chile Argentina Brazil Peru Colombia total At December 31, 2016 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Total assets 4,779,856,500 1,411,985,049 1,431,919,219 1,240,938,778 1,584,057,942 10,448,757,488 Total liabilities 4,202,937,399 813,235,515 530,551,320 403,728,564 414,252,955 6,364,705,753 Total Net equity 885,649,473 655,906,732 781,437,358 693,076,414 1,067,981,758 4,084,051,735 Adjustments to net investment (308,730,372) (57,157,198) 119,930,541 144,133,800 101,823,229 - Net investment 576,919,101 598,749,534 901,367,899 837,210,214 1,169,804,987 4,084,051,735 Percentage of Net equity 21.7% 16.1% 19.1% 17.0% 26.2% 100.0% Percentage of equity 14.1% 14.7% 22.1% 20.5% 28.6% 100.0%

For the six months ended June 30, 2017 Total revenue Total revenue Total segment Regional information, by segment by segment intra-segment revenue ThCh$ ThCh$ ThCh$ Supermarkets 3,677,980,291 - 3,677,980,291 Shopping 183,883,954 62,524,769 121,359,185 Home Improvement 650,047,411 597,681 649,449,730 Department stores 545,438,361 - 545,438,361 Financial Services 108,787,942 - 108,787,942 Others 6,585,188 - 6,585,188 TOTAL 5,172,723,147 63,122,450 5,109,600,697

For the six months ended June 30, 2016 Total segment Total segment Total segment Regional information, by segment revenue revenue revenue ThCh$ ThCh$ ThCh$ Supermarkets 3,642,399,472 - 3,642,399,472 Shopping 166,845,335 55,021,202 111,824,133 Home Improvement 628,881,524 79,027 628,802,497 Department stores 515,952,805 - 515,952,805 Financial Services 82,880,085 - 82,880,085 Others 6,145,379 - 6,145,379 TOTAL 5,043,104,600 55,100,229 4,988,004,371

Consolidated At June 30, 2017 Chile Argentina Brazil Peru Colombia total ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Other non-financial assets 22,344,746 7,825,807 18,462,479 1,790,236 6,160 50,429,428 Trade receivables and other receivables - 15,042,786 3,171,656 - - 18,214,442 Equity Method investments 202,884,485 - - 620,034 - 203,504,519 Intangible assets other than goodwill 220,722,520 10,426,185 61,545,155 111,460,058 7,235,881 411,389,799 Goodwill 246,378,878 1,386,911 387,752,569 270,590,851 523,055,091 1,429,164,300 Property Plant and Equipment 1,095,582,661 203,829,340 311,630,550 359,854,587 550,149,185 2,521,046,323 Investment Property 1,592,801,198 314,725,105 - 203,062,005 29,288,270 2,139,876,578 Income tax assets, non-current 4,852,773 851,530 71,507,175 - - 77,211,478 Non -current assets—Total 3,385,567,261 554,087,664 854,069,584 947,377,771 1,109,734,587 6,850,836,867

Consolidated At December 31, 2016 Chile Argentina Brazil Peru Colombia total ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Other non-financial assets 23,356,132 7,663,639 19,431,481 1,877,863 6,160 52,335,275 Trade receivables and other receivables - 8,815,714 3,077,992 - - 11,893,706 Equity Method investments 199,737,813 - - 989,721 - 200,727,534 Intangible assets other than goodwill 219,352,035 9,823,814 64,145,345 106,901,729 7,945,191 408,168,114 Goodwill 246,378,878 1,467,433 397,062,475 264,355,612 523,055,091 1,432,319,489 Property Plant and Equipment 1,107,174,199 212,741,017 340,287,996 355,639,693 562,950,668 2,578,793,573 Investment Property 1,531,658,588 323,482,594 - 197,264,575 29,288,270 2,081,694,027 Income tax assets, non-current 4,852,774 5,409,578 73,114,098 - - 83,376,450 Non -current assets—Total 3,332,510,419 569,403,789 897,119,387 927,029,193 1,123,245,380 6,849,308,168

The amounts for non-current assets by country shown in this note exclude other non-current financial assets, deferred tax assets as per IFRS 8.

Financial Support Services Services, (Insurance Financing, Shopping Home Department +cards and Other Total Supermarkets Center Improvement Stores +bank) Settings Consolidated As of June 30, 2017 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Property plant and equipment 46,336,135 11,475,695 8,461,373 8,040,446 52,821 1,950,035 76,316,505 Intangible asset, other that goodwill 8,171,423 93,453 1,354,545 2,303,823 53,872 7,789,700 19,766,816 Investment property - 3,314,808 - - - - 3,314,808 Total additions 54,507,558 14,883,956 9,815,918 10,344,269 106,693 9,739,735 99,398,129

Financial Support Services Services, (Insurance Financing, Shopping Home Department +cards and Other Total Supermarkets Center Improvement Stores +bank) Settings Consolidated As of December 31, 2016 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Property plant and equipment 113,455,353 33,906,164 11,131,370 27,836,982 1,258,327 4,803,064 192,391,260 Intangible asset, other that goodwill 8,638,903 138,107 2,964,884 9,083,317 584,489 16,262,072 37,671,772 Investment properties - 1,225,878 - - - - 1,225,878 Total additions 122,094,256 35,270,149 14,096,254 36,920,299 1,842,816 21,065,136 231,288,910

19.1 Civil legal proceedings

● The subsidiaries Cencosud Retail S.A. , Easy S.A., Cencosud Shopping Centers S.A., and Administradora del Centro Comercial Alto Las Condes Ltda., are involved in lawsuits and litigation that are pending as of June 30, 2017. The amounts of these claims are covered by a civil liability insurance policy.

● On May 22, 2015 the municipality constructions authority of Vitacura ordered the stagnation of the project developed by Cencosud Shopping Centers S.A., on the piece of land located at the 8950 of Kennedy Avenue in Santiago. This Municipality based its decision on the fact that the construction does not have the required permission. The Company filed an appeal on June 19, 2015 to the metropolitan administrative authority (Secretaria Regional Ministerial – “SEREMI”), who issued a ruling accepting the Company`s pretentions and ordering the Municipality to adjust its decision.

On November 13, 2015, SEREMI resolved the Appeal brought by Cencosud Shopping Centers S.A., welcoming and ordering the authority of Vitacura, among other considerations, to adjust its action in accordance with the regulations applicable to the date of granting the respective permit. On November 25, 2015, “SEREMI” issued an extended ruling, which reverted its previous position base on the Public Ministry’s opinion.

On December 23, 2015 Cencosud filed a “protection claim” to the Appellate Court, alleging to revoke the SEREMI`s new position redefined on November 25, 2015. On April 2016 the Appellate Court accepted the Cencosud’s protection claim, being appealed that decision by SEREMI against the Supreme Court. On May 30, 2016 the Supreme Court rejected the SEREMI`s pretentions, which means that the ruling originally issued on June 19, 2015 is fully valid, and it confirms the Company`s allegations. On August 17, 2016 SEREMI resolved to invalid its ruling according to the Supreme Court decision.

On August 17, 2016, the SEREMI resolved to invalidate the exempted resolution questioned in compliance with the Supreme Court's ruling. On January 19, 2017, the municipality constructions authority of Vitacura proceeded to invalidate the aforementioned resolution by which it paralyzed the works. On that same date, the authority issued a new resolution in which it established the expiration of the building permit, which was rendered invalid by virtue of a decision issued by the Court of Appeals of Santiago on February 2, 2017.

● During January 2016, the authority National Economic Prosecutor (Fiscalia Nacional Económica FNE) filed a claim to the Free Competition Court (Tribunal de Defensa de la Libre Competencia) against Cencosud, Walmart Chile and SMU supermarkets’ chains, for alleged collusion between the mentioned chains for a price-fixing scheme involving poultry products. On April 6, 2016, a new court´s order was issued, by which the probationary stage began since October 20, 2016.

The Group answered the aforementioned request to the Court on March 22, 2016, and categorically rejected the allegations raised by the FNE in such claim. The company will keep defending itself in the process to prove its innocence.

To Cencosud collusion and anti-competitive practice is unacceptable and totally condemnable.

Potential fines in this case could be up to 30.000 UTA (approximately U.S. $25 million at the time of the suit filing).

● An indirectly controlled subsidiary of Cencosud S,A in Colombia is involved in litigations regarding extra contractual civil responsibility. The amounts of these claims are covered by a civil liability insurance policy.

● The indirect controlled Cencosud Colombia S.A. was legally requested by the social welfare government authority (UGPP), about omissions, arrears and inaccuracies incurred respect the lawful contributions of several employees. The process is being driven by a local Labour Court and it suits pretentions amounted to USD $798 thousand. The Company, in consultation with its legal advisors, considers that the chances of getting a favorable ruling to the position of the company are reasonably higher than obtain an unfavorable ruling.

● A civil lawsuit was filed against the indirectly controlled affiliate Cencosud Brasil Comercial Ltda., by the Public Employees Union in supermarkets in the State of Sergipe, which is awaiting the first instance ruling. The union is seeking compensation for overtime hours for all employees of the subsidiary for the period after May 2007. The petition was filed and supported by the ruling, albeit still not judicial, that was issued through another public civil claim, which annulled a bank of hours from May 2007 to April 2009. Estimated amount of the Union’s pretention is amounted to U.S. $14.4 million at the time of the suit filing.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Cencosud Brazil does not have any knowledge of other civil proceedings that must be disclosed as of June 30, 2017.

● Cencosud Retail Peru S.A, an indirectly controlled subsidiary of Cencosud S,A. has several outstanding cases at the close of the financial statements for liability claims causes. Total amounts claimed raise to MUSD 14. The Company, in consultation with its legal advisors, considers that the chances of getting a favorable ruling to the position of the company are reasonably higher than obtain an unfavorable ruling.

● The indirect subsidiary Cencosud S.A. Argentina and Jumbo Retail S.A. Argentina, present several cases pending at the close of the financial statements for claims of civil liability, the amounts claimed amount to MUSD 3,423. The Company, in consultation with its legal advisors, estimates that the chances of obtaining a judgment favorable to the company's position are reasonably superior to those of obtaining an unfavorable ruling.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document ● The indirect subsidiary Cencosud S.A. Argentina and Jumbo Retail S.A. Argentina, present several pending cases at the close of the financial statements for claims of labor type with their workers, whose amounts claimed amount to MUSD 29,449. The Company, in consultation with its legal advisors, estimates that the chances of obtaining a judgment favorable to the company's position are reasonably superior to those of obtaining an unfavorable ruling.

19.2 Taxation legal proceedings

As of June 30, 2017, the Group’s Companies maintain several taxation legal controversies, which the most relevant are shown as follows:

Stage of Expected Country Society Grounds Amount [1] the process outcome [2] ThCh$ Chile Cencosud S.A. Shares transference cost 7,500,000 Trial Positive Cencosud Internacional Limitada Shares transference cost 27,219,675 Trial Positive Cencosud Retail S.A. Deductible expenses income tax 1,915,647 Trial Positive Cencosud Retail S.A. First category income tax 8,186,021 Trial Positive Paris Administradora Sur Limitada First category income tax 3,768,171 Trial Positive Paris Administradora Centro Deductible expenses, Limitada offsetting losses 2,388,090 Trial Positive Cencosud Retail S.A. Deductible expenses income tax 3,305,773 Trial Positive Sociedad Comercial de Income tax Tiendas S.A. 332,015 Trial Positive Paris Administradora Income tax (PPUA) Limitada [A]. 2,958,859 Trial Positive Jumbo Supermercados Income tax (PPUA) Administradora Limitada.[B] 1,078,379 Trial Positive Peru Cencosud Perú VAT or G&S tax 2,972,705 Trial Positive Brazil Cencosud Comercial Ltda Income tax 52,660,489 Trial Positive Cencosud Comercial Ltda PIS & CONFIS [3] 22,730,566 Trial Positive Cencosud Comercial Ltda Different causes – Activities Tax 13,154,414 Trial Positive

[1] Amount refers to tax payable or tax (rebate). Amounts may vary depending on the time of the suit filing. Fines, interest, translations and adjustments shall be also updated up to payment date, if necessary [2] Potential outcomes are provided for the legal advisors who carry the processes [3] The PIS and COFINS are federal social contributions designed for funding the social security system in Brazil, which are based on company's gross revenues [A] Formerly corresponding to the society Megajohnson´s Maipú S.A. [B] Formerly corresponding to the society Megajohnson´s Puente S.A.

The tax contingencies and taxation legal proceedings disclosed above are deemed to be of a positive outcome.

As of June 30, 2017 the Company has shared-based compensation plans for executives of Cencosud S,A, and affiliates which had no changes compared with December 31, 2016.

As at September 28, 2015 the Company launched the 2016 options plan. All the Executives have accepted this plan, and they have waived in respect to any previous existing plans as at September 28, 2015, which have not been exercised by them, including those not exercised because the respective terms have been met. The change in the plan was given a treatment for following the guidance of IFRS 2 “Share based payments”.

Numbers of shares As of Stock options granted to key executives 6/30/2017 12/31/2016 1) Outstanding as of the beginning of the period 675,000 35,676,984 2) Granted during the period - - 3) Forfeited during the period (10,000) (1,080,000) 4) Exercised during the period (see note 15.1) (15,000) (33,812,984) 5) Expired at the end of the period - (109,000) 6) Outstanding at the end of the period 650,000 675,000 7) Vested and expected to vest at the end of the period 650,000 675,000 8) Eligible for exercise at the end of the period 35 40

As of As of Stock options—Impact in P&L June 30, 2017 June 30, 2016 ThCh$ ThCh$ Impact in the income statement 1,767,330 5,059,660

In relation to the 2016, 2015 and 2014 Retention Plans, the outstanding options as of June 30, 2017 had a weighted-average contractual life of 0.10 years, 0.04 years and 0.04 years respectively. As of December 31, 2016 those options had a weighted-average contractual life of 0.25 years, 0.25 years and 0.10 years respectively.

The Company utilizes a valuation model that is based in a constant volatility assumption to value its employee share options. The fair value of each option grant has been estimated, as of the grant date, using the Black Scholes option pricing model.

The expected volatility is based on market data information. The calculation consisted of the determination of the standard deviation from the Company’s historical closing stock prices during a time horizon approximated to the relevant maturity.

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 21 Assets and liabilities classified as held for sale, and discontinued operations

IFRS requires assets that meet the criteria to be classified as held for sale (a) to be measured at the lower of carrying amount and fair value less costs to sell, and depreciation on such assets to cease; (b) an asset classified as held for sale and the assets and liabilities included within a disposal group classified as held for sale to be presented separately in the statement of financial position; and (c) the results of discontinued operations to be presented separately in the statement of comprehensive income.

As of June 30, 2017 and December 31, 2016 assets and liabilities are presented as non-current for disposal classified as “held for sale”. According to the disclosures required by IFRS 5, the balance is the following:

1) Balance of the assets and liabilities classified as non-current assets for disposal - “held for sale”, as of June 30, 2017 and December 31, 2016 are presented as follows:

6/30/2017 Assets Unaudited 12/31/2016 ThCh$ ThCh$ Other financial assets, current - 5,011 Other non-financial assets, current 193,341 134,502 Trade receivables and other receivables, current 449,245 929,937 Inventories, current 945,550 877,016 Total current assets 1,588,136 1,946,466 Non-current assets Trade receivables and other receivables, non-current - 8,879,073 Property, plant and equipment 59,549,977 43,359,091 Investment property 2,939,242 2,939,242 Total non-current assets 62,489,219 55,177,406 Total non-current assets classified as held for sale 64,077,355 57,123,872

6/30/2017 Liabilities Unaudited 12/31/2016 ThCh$ ThCh$ Current liabilities Other financial liabilities, current 351,481 1,842,529 Trade payables and other payables, current 2,199,434 2,802,909 Other provisions, current 111,699 78,699 Current provision for employee benefits 57,549 75,319 Total current liabilities 2,720,163 4,799,456 Non-current liabilities Other financial liabilities, non-current 3,292,971 10,869,777 Total non-current liabilities 3,292,971 10,869,777 Total non-current liabilities classified as held for sale 6,013,134 15,669,233

Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Detail of the assets and liabilities classified as non-current assets for disposal as “held for sale” as of June 30, 2017, and December 31, 2016 are presented below:

a) Sale of non-strategic assets: Pieces of land Chile

As of June 30, 2017, date of close of these financial statements, the Company remains committed to the plan of sale of undeveloped land in Chile. The process has been planned, defined and structured in conjunction with the Property and Shopping Divisions Management.

The assets included in this plan correspond to assets classified among Properties Plant and Equipment and Investment Property items, whose book value is expected to be recovered through the future sale, rather than continuing using them within business units that the company operates. The sale of these assets is considered highly probable, and is expected to be materialized during the next twelve months. Key management has initiated an active program with the necessary actions to conclude agreements of significant conditions, such as the price and timing of the transactions with unrelated third parties, and finally sell them within the defined term.

The Company has taken a number of administrative and operational plans to finalize the sale, therefore it has commissioned exclusively to the brokerage society “Colliers” to market these assets so. This company has extensive expertise in real estate and finance sectors.

Non-current assets and liabilities classified as held for sale as of June 30, 2017, and December 31, 2016 are presented as follows:

6/30/2017 Property, plant and equipment; and Investment property held for sale Unaudited 12/31/2016 ThCh$ ThCh$ Land 34,259,403 16,570,947 Facilities 341,139 348,921 Furnishings - 5,511 Leased assets 4,955,151 5,414,316 Buildings 3,431,750 4,456,863 Total property, plant and equipment 42,987,443 26,796,558 Other financial liabilities, current and non-current - Leasing (3,644,452) (3,860,774) Investment property 2,939,242 2,939,242

Detailed assets, classified as held for sale, have been recognized at the lower of carrying amount and fair value less costs to sell, from the moment of the reclassification.

b) Gas stations - Colombia

Colombian gas stations, previously reported under the “supermarkets” segment in our financial statements, has been included within the assets and liabilities held for sale as of June 30, 2017 and December 31, 2016, are presented as follows:

6/30/2017 Gas stations - Colombia Unaudited 12/31/2016 ThCh$ ThCh$ Other non financial assets, current 193,341 134,502 Trade receivables and other receivables, current 449,245 312,416 Inventories, current 945,550 877,016 Property, plant and equipment 16,562,534 16,562,533 Trade payables and other payables, non-current (2,199,434) (2,802,909) Other provisions, current (111,699) (78,699) Current provision for employee benefits (57,549) (75,319) Total gas stations classified as held for sale 15,781,988 14,929,540

The Company determined a plan for the sale of these assets, for which is expected to be completed in one year.

On December 15, 2016, a contract was signed for the sale and transfer of assets and for the transfer and assumption of liabilities between Banco Paris and Banco Scotiabank Chile, where Banco Paris sells, and transfers to Scotiabank a set of mortgage loans granted By Banco Paris to different debtors, a set of assets originated in the acquisition of mortgage bonds issued by Banco Paris under the terms of Chapter 9-1 of the updated SBIF and II. A.1 of the Compendium of Financial Regulations of the Central Bank of Chile and other financial investments made by Banco Paris, all of them net of the corresponding provisions. The sale, assignment and transfer of the assets object of this instrument will be perfected on the closing date, as this term will be defined later by the parties. The sale, assignment and transfer of the assets object of this instrument were formally completed on January 1, 2017.

Assets and liabilities held for sale allocated within the Banco Paris business as of December 31, 2016 are presented according to the following detail:

12/31/2016 Banco Paris ThCh$

Other financial assets, current 5,011 Trade receivables and other receivables, current 617,521 Trade receivables, non-current 8,879,073 Other financial liabilities, current (1,495,228) Other financial liabilities, non-current (7,356,304) Net value of Banco Paris classified as held for sale 650,073

● On June 27, 2017 the Company initiated an offer for the acquisition of Bonds issued by the Company in international markets for a total amount of up to ThUS $ 750,000, for the purchase of bonds issued on January 20, 2011, with a maturity date of 2021 ("Bonds 2021 "), and bonds issued on December 6, 2012, with a maturity date of 2023 (" Bonds 2023 "). The repurchase values offered were 109.875% of the PAR value for the 2021 Bond and 108.25% of the PAR value for the 2021 Bond.

Besides, dated July 17, 2017, Cencosud S.A. issued and placed in international markets a new series of bonds for a total amount of ThUS $ 1,000,000, with a 10-year maturity, with a placement interest rate of 4.419% and a coupon rate of 4.375% "Bonds 2027"), in accordance with regulation 144 A of the Securities Act of 1933 of the United States of America and its corresponding Regulation S. All in accordance with the terms and conditions contained in the document governed by the laws of the State of New York, United States of America, called “Offer to Purchase”, issued by the Company. The resources generated by this issue were intended to pay for the repurchase of Bonds 2021 and 2023 in the securities offered, the refinancing of other liabilities and other corporate uses.

As a result of these operations and in particular, as a result of the repurchase of “Bonds 2021” and “Bonds 2023” over their book values, a negative effect has been generated on the current results estimated amount of CLP $ 28,000 million, which will be recognized under financial expenses during the third quarter of 2017.

Between the date of issuance of these condensed consolidated financial statements and the filing date of this report, management is not aware of any other subsequent events that could significantly affect the consolidated financial statements.